Britain’s biggest property developer sounded the death knell for rent concessions for its retail tenants yesterday.

Francis Salway, the chief executive of Land Securities, said that he would no longer offer rental deals amid signs of increasing demand for space. The company has 1,600 retail tenants including Boots, John Lewis and Next.

He said: “The downturn has been tough on property companies and on retailers. There are instances of retailers still asking for concessions, and it can be in our interests to show flexibility in specific areas, and we have led on a number of such initiatives. However, we do not believe across-the-board changes to agreed contracts are appropriate.”

Landlords including Land Securities and British Land have offered a number of deals in recent months to retailers in danger of going out of business to stem the loss of income from empty stores.

Land Securities announced that it was offering a new lease that does not penalise tenants for paying monthly instead of quarterly, which it intends to roll out to its entire portfolio. Quarterly rents have come under attack from retailers, including Sir Philip Green, the owner of fashion chains including Topshop, Bhs and Miss Selfridge, and Lord Harris of Peckham, the executive chairman of Carpetright, for being “archaic”.

A spokesman for the British Retail Consortium said: “We have been campaigning to pay rent monthly instead of quarterly since 2006, because it is fairer. Landlords have been willing to show flexibility but there is always room for more landlords to demonstrate more flexibility.”

Argos and O2 are the first signatories of Land Securities’ new Clearlet lease. As well as scrapping the 1 per cent premium on monthly payments, it has also replaced rent reviews linked to the open market with a review linked to retail price inflation.

Mr Salway’s comments, which came as landlords reported an increase in the number of lettings for prime retail space, indicate that further negotiations on rental contracts were unlikely and that retailers may have to find other ways of cutting costs.

Mr Salway’s view was supported by the British Property Federation (BPF), which represents the country’s biggest landlords. Liz Peace, its chief executive, said: “We’ve seen first hand the steps landlords are willing to take to help retailers, from offering monthly rents to working with them to reduce service charges. But the fact everyone needs to understand is that cutting rents too far would undermine the investment value of retail property.

“Without some kind of return, investors will go elsewhere and this will mean that the modern premises retailers need to be able to do their business will not get built. By pushing rents down too far they could be cutting off their nose to spite their face.”

Signs that demand for space from both new and existing tenants is growing has led some to claim that the dynamics of the market have once again given landlords the upper hand.

A spokesman for British Land, the UK’s second-biggest property company, said: “British Land is seeing more demand from new and existing tenants. In a well-functioning market both landlords and tenants will push as hard as they can and try to get as much as possible out of the other before settling somewhere in the middle. It is a question of who has the upper hand, and where there is good demand from tenants and low vacancy rates, landlords do not need to give more.”

Hammerson, another commercial landlord, said that the market was on the cusp of a switch from favouring tenants to favouring landlords.

Retail rental values fell by 0.5 percentage points in September, according to the Investment Property Databank, while prime rental yields hardened to 5.5 per cent from 6 per cent the previous month. Yields for prime shopping centres hardened by 25 points to 6.85 per cent, according to CBRE, as a result of an increase in investor demand.