How much rent do you pay for your business premises? Ever wonder how much your neighbouring businesses pay?
Around 40 small businesses in the West End are preparing to answer that question, by opening their books in a scheme to tackle rising rents in London.
Companies go into combat
The businesses, all members of the West End Chinatown Tenants’ Association, will be sharing details of their rental costs and agreements and allowing them to be recorded in a database. This will allow other neighbouring businesses to discover what nearby companies are paying, including details of any discounts and rent-free periods offered.
The hope is that this information will give businesses more power when negotiating with landlords during rental reviews – and if this initial database is successful, the FSB plans to trial a similar scheme in Shoreditch ahead of a nationwide rollout.
The scheme is being led by Jon Man, the owner of Chinatown’s HK Diner restaurant, who found his annual rent rising from £300 per square foot to £345 during a rental review two and a half years ago. Later, he discovered that a nearby property owned by the same landlord had agreed a recent rent of £295 per square foot shortly before.
The scheme is being supported by the Federation of Small Businesses (FSB) and also by commercial property firm DeVono, which says that demand for commercial property in London has tripled since March 2013. At the scheme’s launch event, which is being described as the largest ever gathering of independent businesses, the organisers hope to convince 200 independent West End businesses to sign up to the initiative.
“London is a bit like a swan at the moment,” says FSB London Policy Chairman Sue Terpilowski. “On the surface it looks like everything is wonderful because tourists are coming and we have a vibrant business community, everyone says occupancy is at a high level, but underneath it is all starting to crack and people are frantically trying to shore up the holes.”
The problem is exacerbated, says Terpilowski, by exceptionally high business rates and the increasing scarcity of commercial property as landlords convert it to residential, knowing they can make more money from it. “The next mayor has to make some very bold, big decisions very quickly to preserve the London community of small businesses,” she says. “It is at a vital point – we are calling on the mayor to make sure their number one priority is to take a look at this issue when they take office.”
Gareth Thomas, shadow deputy minister for London and tipped to be a potential Labour candidate in London’s next mayoral election, agrees. “The mayor needs to champion small businesses and independent entrepreneurs, putting them at the heart of regeneration and modernisation plans and standing up to the big property companies on their behalf.”