Over the years I have acted not just for Landlords where Betting shops such as William Hill, Ladbrokes, Betfred etc. are Tenants but also for one of the major high street gambling retailers. We at Richard Lionel & Partners have argued both sides of the coin when negotiating rent reviews for and against the bookmakers.
The Landlord/Tenant relationship with bookmakers has over the past few years worked well, especially for smaller private Landlords. Whilst the bookmakers negotiated often the keenest rents, their Landlords had the security of a good covenant and a Tenant who would be sure to pay their rent in a reliable fashion.
With the recent news that from April 2019 the Government is bringing forward legislation to cut the amount one can gamble on fixed-odd betting terminals to a mere £2.00 per spin, this spells bad news for bookmakers.
In recent years, fixed odd betting terminals have proved profitable and a reliable source of income for all bookmakers hence the unprecedented amount of retail units they currently rent throughout the UK. The new legislation will almost certainly push those who enjoy gambling to bet online instead where these restrictions are not yet applicable resulting in the closure of thousands of betting shops across the land.
When facing a forthcoming rent review, it is true that the betting shops are still liable to agree terms based upon the fair Open Market Rental Value which is not based upon how well or badly a business is performing. However should these shops be approaching a Lease Renewal which many currently are, this is a totally different scenario.
Whilst rent reviews are almost always upward only, lease renewals when terms are renegotiated can see rents fall as well as rise. With profits down, the
bookmakers are likely to either vacate units handing the keys back to unhappy Landlords now facing no rental income or at the more profitable units, the likelihood is that the bookmakers will renegotiate low rents which could have a knock-on effect on the whole high street with new low comparable evidence created.
Should this occur, the low comparable evidence created will certainly be pounced upon and used against Landlords when negotiating current rent reviews and lease renewals with other existing Tenants. Whilst this could be good news for independent retailers hoping for rent reductions it spells potentially worrying times for landlords.
As of today, nobody knows what the true affect this change of legislation will have on the high street however at Richard Lionel & Partners, we would not like to bet on it!