John Lewis Challenges Landlords on Service Payments

It has been reported by the BBC that John Lewis has told landlords in certain locations that it will not be paying in full for quarterly service charges.

Service charges are paid in addition to rental fees to cover additional building services such as maintenance, cleaning, heating and security. 

John Lewis is understood to be withholding 20% of the quarterly charge for some stores, claiming that fees are too high.

 A landlord told the BBC: "This was done without any consultation," adding, "Every landlord will be looking at their lease, talking to lawyers who will get revved up to recover this money as a debt."

A property expert told the BBC: "I am astounded to hear this from a company which sets the gold standard in retail," adding, "There's nothing new in retailers trying to challenge the specifics of a service charge. But to seek to withhold money like this is in breach of a contract. This is going to go down like a lead balloon."

Earlier this week, the John Lewis Partnership confirmed its intention to run Waitrose and John Lewis as one business, rather than two independent retailers with their own management teams. Savings are expected to be in the region of £100m a year.

John Lewis said, in a statement: "At a time when we are doing everything we can to reduce our cost base, we have unfortunately been faced with regular increases to the service charges we pay for some of our shops in shopping centres.

"Over the last three years we have seen an increase in service charges of 20% and these continued increases are simply not acceptable, particularly in the absence of strenuous efforts by landlords to work collaboratively with us to reduce these costs.

"We are investing more in our current shop estate than ever before to do everything we can to encourage customers to grow footfall to our shops and we hope that our landlords will support us in continuing to do this."

In recent years, a raft of retailers have sought CVAs as a way to reduce costs, meaning that some of John Lewis' competitors are paying significantly less rent for their sites, as we move into retail's 'Golden Quarter'.

Source : Insight DIY Team

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