Rent Restructures Sound Alarm for SME Landlords and Tenants

When news broke that River Island, one of the UK’s most recognisable high street brands, was on the brink of collapse unless landlords backed a sweeping rent restructuring plan, it grabbed attention. Rightly so, but while the headlines focus on a well-known retailer, the real message is one that should resonate far beyond the high street giants.

The challenges facing River Island – spiralling operational costs, changing consumer behaviour, legacy lease burdens – are not unique. They reflect a broader shift in how commercial property is occupied, negotiated and, crucially, sustained.

What’s happening with River Island may appear to be just another big-brand retail saga, but it has significant implications for all business owners. That’s true whether you own property, lease it, or depend on it as part of your growth.

Why this matters to all business owners

At the core of River Island’s restructuring plan is a request to reduce rents. In some cases, that means by as much as 75%, and even to zero for underperforming locations. If landlords don’t agree, the company has warned it could run out of cash by the end of August and face administration. This is a high-stakes moment, and one that speaks volumes about the current state of commercial property dynamics.

If you're a landlord, especially one with a small portfolio or properties leased to retail or hospitality tenants, this should be cause for reflection. Are your current lease structures sustainable for the tenants you serve? Have you considered what happens if one or more occupiers begin pushing for rent reductions, or worse, vacate altogether?

For tenants, the key takeaway is just as urgent. Inflexible lease terms that made sense two or three years ago may now be more like a straitjacket. As inflation bites, energy bills surge, and consumer spending flattens, profitability is under pressure. Lease obligations are often among the heaviest fixed costs on the balance sheet.

The new landlord-tenant dynamic

What we’re seeing is the acceleration of a trend that has been building since the pandemic: the shift away from rigid, long-term, full-repairing leases toward more flexible, performance-based arrangements.

Turnover-based rents, break clauses, stepped rents, and collaborative fit-out contributions are no longer just tactics for struggling retailers.

They are becoming part of the standard toolkit for any business trying to stay agile. But too often, I see landlords, particularly smaller or independent ones, resisting this shift until a tenant is in crisis.

River Island’s situation should act as a reality check. It is a reminder that landlords and tenants share a common interest in long-term viability. An empty unit benefits no one. A well-supported tenant, even on revised terms, may be far more valuable than a vacant shopfront and a legal dispute.

What landlords should do now

If you’re a landlord, now is the time to get proactive. Start by reviewing your lease portfolio.

Ask yourself:

• Which tenants are under pressure?
• Are any leases due for renewal or break soon?
• Where could a flexible discussion now avoid a crisis later?

If a tenant approaches you with a restructuring request, whether formal or informal, don’t dismiss it out of hand. Yes, protecting your income is important. But so is avoiding the cost and time involved in re-letting, legal proceedings or lengthy void periods.

In many cases, a well-drafted variation agreement, a short-term rent concession or even a stepped rent model can preserve your investment while giving the tenant breathing space.

For tenants: flexibility is negotiable, but timing is everything

For occupiers, the message is equally clear. Don’t wait until you’re in trouble to open the conversation. If your lease terms no longer reflect your commercial reality, it’s better to address that early.

Landlords are far more likely to engage constructively if you can present a clear business case, demonstrate that you’re seeking long-term sustainability rather than just short-term relief, and take legal advice to shape your proposal in a way that protects both parties.

At Harper James, we’ve helped many SME tenants restructure leases on more favourable terms. That includes introducing turnover-linked rents, break rights and even renegotiating service charges where appropriate. These aren’t quick fixes, but they are viable, legal and often vital steps to keeping businesses on track.

A moment to rethink, not just react

River Island is not the first big brand to seek a major lease restructuring, and it won’t be the last. However, its current challenges shine a light on something deeper: the need for all, both landlords and tenants, to treat lease arrangements as dynamic, evolving parts of their business strategy.

For entrepreneurs, founders and fast-growth companies, this means building in legal flexibility as you scale. For property owners, it means adapting to tenant needs while safeguarding long-term returns.

Above all, it’s a call for dialogue. If we’ve learned anything in the last few years, it’s that the businesses that thrive are the ones willing to adapt.

Samantha Paxton is a senior commercial property solicitor at Harper James, a national law firm helping entrepreneurial businesses across the UK with legal support that’s accessible, affordable and designed for growth.