The Chancellor again sees the commercial property sector as a soft target from which to raise income

Professional Services News

In the latest Budget Gordon Brown has continued his steady attack on the commercial property market, yet again seeing this sector as a soft target from which to raise income.  This time he has concentrated on business rates relief on empty commercial property. 

The current position prior to the proposals (if implemented) is as follows:

Type of Property                        Business Rates Relief

Retail Premises                    100% relief on business rates payable for 3 months

                                          50% business rates payable thereafter

Office Premises                    100% business rates relief for 3 months

                                          50% business rates payable thereafter

Industrial Premises               No business rates payable whilst the premises are empty

The Chancellor’s proposals simply provide a short window of 3 months business rates relief in respect of retail and office premises, with a slightly more beneficial 6 month relief period for industrial premises.  Thereafter 100% business rates are payable on all types of commercial property, whether they be occupied or remain vacant.

If ratified the proposals will be implemented on 1^st April 2008.

These proposals have been met with huge concern from the property industry as the increased financial liability will undoubtedly:

1. Prevent and constrain speculative development of commercial property, particularly in the industrial sector and also the weaker commercial centres where demand is likely to be weaker but in respect of which regeneration is most needed.

2. Place increased financial burden on companies that are having to seek to downsize/rationalise, which in certain instances could be the difference between a company entering Receivership/Liquidation or continuing to trade.

The Royal Institution of Chartered Surveyors has expressed its concerns already and invited members to voice their own concerns.  Hopefully these views will cause the Chancellor to reflect more fully upon the  implications of the proposals that were announced within the Budget. 

Andrew Chapman an Equity Partner and head of FHP’s Rating Team commented:-

“I find no logic behind the proposals as they will serve to hurt those who need the help most, as well as constraining development and the associated revenues that flow into the Treasury from the development process”.

Whether you are an occupier, investor or developer of commercial property we strongly urge those with vested interests to make their own views heard by writing directly to either:-

Rt. Hon Gordon Brown MP, HM Treasury, 1 Horse Guards Road, London, SW1A 2HQ.                       

Mr G Chase, President of The Royal Institution of Chartered Surveyors, c/o Chase & Partners, 20 Regent Street, St James’, London, SW1Y 4PH.

With every business having to trade in an ever more competitive national and global economy, reducing annual overheads remains a key component of any business strategy,  Andrew Chapman further commented:-

“Regardless of the Chancellor’s changes we continue to find it hard to understand why many businesses either do not challenge their rate liabilities or engage “rating cowboy” firms to advise them upon their affairs”. 

At FHP we have specialist rating surveyors who have the expertise to establish whether or not savings can be made.  For further information please contact either Andrew Chapman MRICS IRRV or Peter Fullam BSc (Hons) PGDipSurv at our Nottingham office or Adam Wilson BSc (Hons) MRICS ACIArb at our Derby office.