Will the Rent push businesses under?

Experts have warned that more retail businesses could be under threat as quarterly rent bills fall due.

Retailers who are struggling with falling sales because of the recession are now facing the moment when they will be asked to pay the rent for the next three months' and this could easily push some over the edge and into oblivion. Fears that many businesses could sink without trace has encouraged the British Retail Consortium to call for Landlords to allow rents to be paid on a monthly basis and help relieve the cashflow difficulties that most retailers are facing.

And it is not only the retailers; many other businesses are also suffering cashflow difficulties especially when the quarterly rent bill arrives.

The Retail Consortium believe that following a disappointing Christmas and New Year this quarter's rent payments would prove to be the toughest since the late 1980’s and some landlords have indicated they are prepared to be flexible and are willing to spread payments and renegotiate service charges.

The importance of retailers' ability to pay their rent cannot be underestimated; when photography specialist Jessops announced it would be able to pay its rent the share prices jumped 85%.

Smile! Its only money!

London’s top divorce solicitor, Raymond Tooth (sometimes known as Jaws) has a mean reputation for achieving enormous settlements for ex-wives and is constantly being sought out by unhappy ladies. With a credit crunch in progress it might not be the best time (some would say) to be attempting to wrestle those large assets from your husband however, even Mr Tooth seems to have outdone himself as, with the downturn in the economy, he has managed to achieve 105% of the ex-husbands assets for one very happy lady in pink, albeit the original decision by the Court only awarded her 43% last February!

Needless to say the ex-husband (would you believe a fund-manager in the financial sector) has gone to the Court of Appeal claiming it is unfair as the deal was struck last February before the share price of his company plummeted. It will be very dangerous for the Court to alter the capital settlement as it would mean that anyone was able to reopen a settlement – if a husband gambles on the future price of shares whilst giving liquid assets to his ex-wife (because he thinks the shares will be worth more) why should the Court review the settlement when the husband made the wrong choice? There are a few ex-husbands and wives doing sums and awaiting the outcome.....

Although some will be delighted in another financier getting his comeuppance realistically he would have to borrow half a million to make up the outstanding payment – do we feel sorry for him? Probably not but let’s face facts, which bank will he be able to borrow the money from?

Mr Tooth made his name in the 60’s picking up Clients through Tramps and other nightclubs and is now probably the country’s leading authority on obtaining maximum settlements. His Client base is 60% women and 40% men and at 68 must still be enjoying the chase. After all there is great financial reward available when you are pulling in the right settlement.

Although twice divorced Mr Tooth believes it may be wise for the ladies to “hedge their bets” his opinion is that the gentlemen will win with divorce settlements whilst the credit crunch is on. Experts predict the divorce rate will rise as couples split due to pressured finances. Suggestions people will “hedge their bets” appear to be unfounded, our family department is thriving.

Top of the League!

Crookham Rovers, sponsored by Brooks & Partners, are now top of the Aldershot and Sunday football league, division one, and intending to stay there. During the season the team have worked incredibly hard to achieve the results they have, weathering the storms of cancelled games (literally) and losing valuable team members to long term injury as well as a couple moving away from the area.

Not only are they top of their league but this week will see them take on local rivals in the semi-final of the league cup and we wish them luck on Sunday in the top of the table clash.

Still Got a Pension? It's good news...

Following research by Prudential we are told that more than 2 million people now have to postpone their retirement because of the fall in value of their pension funds. That is, people in the private sector who do not have the benefit of public sector final salary pension scheme (no further comment needed here except perhaps for a sigh).

That having been said many annuity rates have actually achieved more than anticipated in view of the current economy and some pensions are allowing workers to make changes in the pension arrangements so that they still provide very good value.

Many workers had anticipated being able to fund part of their retirement from the interest earned on deposit accounts but, with rates still dropping (now 0.5%), it does not look as it this will be feasible for a little while yet.

If we journey back in time to the last recession there were a couple of pension/insurance companies that went spectacularly to the wall losing millions and leaving many people with no pension at all. Hopefully this indicates that, in reality, many people are better off today in that they still have a pension rather than having nothing at all.

The Housing Market: One Good, One Bad....

Bad: Property sales between December and February were at their lowest in the last 31 years.

Good: We have had four consecutive months of rising enquiries from new buyers.

Bad: The National Housing Federation predicts 50% less new homes built in the next year

Good: Prompted by sharp cuts in interest rates buying is becoming more affordable

Bad: Buyers are still in difficulties with lenders demanding high deposits

Good: Family homes remain in high demand

Bad: Difficulties in obtaining mortgages even at the current low interest rates and with a full deposit

Good: Property prices are down

Although things have definitely improved during February nobody involved with the housing market is yet out of the woods. It is time the government stepped in and put funds into new social homes which would assist not only those looking to buy a house but also house builders who are very busy “mothballing” many of their developments.

The government got it wrong when they fiddled about with lowering the VAT rate – now is the time to make a very serious dent in stamp duty, let’s say 0% up to £250,000.00 and 1% between this and £500,000.00. That should help get the market moving again!

Got any equity? Go on – release some and live a bit!

Equity release schemes go in and out of fashion and have good and bad reputations depending on markets, availability, eligibility and lenders. So, let’s look at some facts:

· You and your partner continue to live in the property for the rest of your lives;
· You draw a tax-free cash lump sum or take an income;
· The money is borrowed from the equity you have in your property with interest rolling up year on year;
· The debt is cleared either when you go into care or you die;
· Your age, health and the value of your property are taken into consideration;
· Members of the Industry body, Safe Home Income Plan, protect people with a “no negative equity guarantee” meaning you can never owe more than your property is worth.

There is a misconception about the amount people borrow and, in most cases, this is not a high proportion of what they actually can, most only want enough to be comfortable. People can borrow a percentage of the property value and initially only take a small drawdown and take more later on – you only pay interest on the amount you have taken.

The current economic climate can, in some ways, be helpful. Although property prices are not as high as a year ago interest rates are now very low – house prices may fall a bit more over the next year or two but, if you take an equity release now, it is taken at the value of the property today. The equity release package is intended to last for much longer than two years and so the property price is very likely to recover before repayment is required. This should then have the effect of the property achieving a higher sale figure and, hopefully, providing inheritance to dependents. There are even equity release schemes that allow you to earmark a percentage of the property value for inheritance purposes.

Vickie Sturman, who works in our Residential Conveyancing Department, is our expert on this subject and would be happy to advise further on the subject.