Why is rent paid on quarter days???
Post categories: general
|15:00 UK time, Thursday, 15 April 2010
I was chatting to Ian Coull Chief Executive of SEGRO today about the need for the property industry to shift a gear or two. The conversation covered lots of topics but a key insight for me was his remark that some of today's leasing practices are 600 years old!
Ian was referring to the ancient practice of charging rents in advance on quarter days. For those not familiar with UK leasing practices these dates are:
25 March - otherwise known as Lady Day
24 June - Midsummer Day
29 September - Michaelmas
25 December - Christmas Day
I have always wondered why this practice came into being and there is a lot of history available on the web that provides the background. Why the strange dates and why pay in advance for three months?
As a consumer of real estate I see many areas of opportunity for the industry to up its game but if we continue to hold on to archaic practices such as this there is little prospect of truly moving into the 21st Century!
Comment number 1.
At 10:21 30th Apr 2010, lookingnorth wrote:I'm sure as tenants the BBC would prefer to may rents in arrears but for cashflow planning at least this old practice is at least consistent, even if the days seem somewhat arbitrary to us now.
I agree that lots of our real estate practices need changing to allow both landlord's and tenants to be more flexible and fleet of foot. I remain to be convinced that this is the best example.
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Comment number 2.
At 17:00 23rd Jun 2010, Sonas1 wrote:The dates you refer to of course apply to England and Wales. Scotland has different quarter days.
I wouldn't say that they are archaic, except perhaps for the choice of dates. Scotland has moved away from the traditional dates to 'metric quarter days' but I'm not sure which is the more common.
Paying rent in advance is standard industry practice. Having 3 months rent in advance provides protection for landlords against financially unsound tenants. An alternative would be a rent deposit or rent guarantees but these create problems and paperwork of their own.
In some countries (eg. New Zealand) commercial rents are usually paid in advance monthly
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Comment number 3.
At 05:45 25th Jun 2010, Chris Kane wrote:Thanks to Sonas1 and Looking North for comment - I do appreciate it!
Firstly my overall point is that the property industry generally hasn't really moved on in years except of course in Scotland as Sonas1 points out.
There is little evidence of innovation and this example was posted to highlight the fact that much of our property system is rooted in the past - take for example the 1954 Landlord and Tenant Act.
Over the coming weeks I will blog some more on this point - the inertia of the supply side of the industry. There are some big opportunities for all parties to move our industry to a better more sustainable place.
Thanks again for entering into this debate
Chris
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