POUND SHOPS selling cheap household goods and plastic toys have become a familiar sight on high streets in the UK – just as they have in Ireland – as the downturn has bitten. But according to the Financial Times the term has taken on another meaning with reports of knock-down rents of just £1 a year on hard-to-let shops.

With the number of boarded -up shops profilerating on high streets, retail landlords have become desperate to avoid paying rates on empty units and are happy to sacrifice the rent.

Dixons, owners of electrical retail chains Currys and PC World, told the newspaper it is paying a nominal rent of £1 a year on a “small handful” of its 121 high street premises. The majority are on streets with high vacancy rates.

Clinton Cards confirmed that it also had “business rates only” deals on a few of its 600 UK stores, and other landlords are tempting charity shops to fill voids and reduce their rates liability.

Typically charged at 40 per cent of a shop’s estimated annual rental value, the business rates system has been heavily criticised by retailers and their landlords. Because it operates on a five-year cycle, the system is slow to recognise falls in rents, yet annual increases are pegged to inflation.

This means rates bills will go up by 5.6 per cent next April at a time when high street rents in many areas are falling.