River Island’s potential collapse shows national insurance increase will also hurt landlords
The potential collapse of the fashion retailer, River Island, shows that the National Insurance Contribution (NIC) increase will also hurt commercial landlords, say leading audit, tax and business advisory firm, Blick Rothenberg.
Mark Cunningham, a partner at the firm, said: “Increased staffing costs are not only impacting employers, but also the landlords they rent their premises from. As to reduce overheads, retailers may shut stores or pay reduced rents.”
He added: “If River Island’s rescue plans are approved, which include shutting 33 stores and paying reduced rents on a further 71 shops, their landlords will take a significant hit to their finances. They may have to take rent cuts of between 25% and 100%. This in turn will mean their property valuations will suffer.”
Mark said: “River Island recorded a group loss of £24.4m in 2023, a year in which employers national insurance costs alone stood at £11.1m. With the recent increases in NIC that number will only have risen further, contributing to its collapse and adding to the accelerating job losses in the UK.”
He added: “Forthcoming interest rate cuts will help, but the government ultimately needs to look beyond these to stimulate growth. In the meantime, they must protect the retail and hospitality businesses that support local economies and employment. Supporting them also protects commercial landlords who own the properties these businesses rely on.”
Mark said: “Such protection will be difficult whilst the chancellor is under pressure, but the government has previously demonstrated that targeted, sector specific support can be effective. They should be prioritising rates reform, including enhancing and extending of the current reliefs, VAT reductions and national insurance holidays.”