Britain’s largest retailers are uniting in an attempt to change the centuries-old practice of paying landlords quarterly rent payments in advance.

The consortium of retailers, which includes Boots, Next, Argos and Arcadia, are demanding that landlords now accept rent payments on a monthly basis. These moves follow on from the Rent Monthly Campaign initiated by the British Retail Consortium in 2006 which was supported by more than 80,000 small retailers. The retailers argue that making quarterly rent payments in advance has a significant effect on cash flow and the process contrasts with the normal commercial practice whereby invoicing for business services is on a monthly, after-the-event basis. In 2006 the BRC claimed that the current rental system costs retailers around £145 million a year.

The landlords, who include large property companies such as British Land, Land Securities and Hammerson, are in a strong legal position and are likely to be resistant to change. It is normal practice for a lease in respect of commercial property to include provisions relating to quarterly advance rent payments, and there will be no legal obligation on landlords to alter their stance.

The practice of paying rent monthly in advance is already popular in the United States and in certain parts of central Europe. Fifty councils in England and Wales agreed to accept monthly rent payments from retailers in late 2006 as a result of the Rent Monthly Campaign.

There have already been some concessions from landlords in respect of retailers based in out-of-town shopping centres. However, many landlords have ensured that any move to monthly rent payments have not been advertised to prevent other tenants wanting to follow suit.