Eli5: Why are so many office blocks and retail shops in UK that are ” to let” remain empty for months, rather than to reduce rent ? Why do landlords do this?

Question

Eli5: Why are so many office blocks and retail shops in UK that are ” to let” remain empty for months, rather than to reduce rent ? Why do landlords do this?

In: 1189

Answer 1

Landlords have borrowed on the value of the property to raise money for the purchase of more property or investment in business. If they rented out the property at the much lower, going market rate, the bank would re-assess the value of the property downwards and they’d face a potentially massive call for a top up on the discrepancy in value. So they’re better off leaving it empty advertised a the unrealistic price than they are adjusting the rent to the actual price.