One of the largest office providers, Regus, has angered landlords by using an insolvency process to negotiate reductions in rent on some of its properties.

Regus, the global company, has given some of the UK's largest landlords an ultimatum to cut the rent of its unprofitable offices by having rent free periods and discounts in future, the Financial Times reported.

The British Property Federation (BPF) has condemned the move as it claims Regus is using the law to allow parts of the business to be packaged into a company which can claim to be insolvent even if the parent company is profitable.

A statement from the BPF said: "It is unclear why the leases would not revert to the profitable parent company in the event of any vehicles set up to absorb leases going into administration."

Liz Peace, chief executive of the BPF, added: “This appears to be a cynical move by a highly regarded company, and is the first time a part of the property industry has used such tools against the rest. Landlords are caught between rock and a hard place when it comes to bailing out occupiers at the expense of their shareholders or facing the prospect of empty space and the costs that come with it.

“We need to see the insolvency rules tightened up to stop this kind of abuse and landlords need to think about asking for some kind of clawback if they make concessions to enable them to obtain some benefit from the upturn when occupiers they bail out come back," she added.

Although Regus declined to comment on the potential use of insolvency procedures in its business, a spokesman confirmed it planned to "regear" a small number of its portfolio which consists of more than 135 properties.

He explained a "regear" meant a negotiation to reduce rent and extend the leases.

A statement by Regus added: “The UK is the toughest business environment of our geographies. Like many other companies with operations in the UK we are seeking to regear a small number of leases."

"However, we remain fully committed to our operations in the UK. We will continue to grow our leadership position in the UK and are contracted to open six centres in the next two months.”

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