In an effort to try and re-generate town centres the Chancellor, George Osborne, has given control over the setting of business rates to local councils.
In Mr Osborne’s eyes, this new level of autonomy will give local council the opportunity to set there own rates (cutting or increasing) and therefore encourage re-generation in there own towns and cities.
Rates are calculated by multiplying the rental value of a property by either the standard rate (49.5p) or the lower rate (48p), before subtracting any rate relief.
As usual with big announcements to come out of Government, opinion is polarized.
The British Retail Consortium (BRC) feels that 80,000 more shops shall be closed within 2 years due to this “Tax on jobs and growth’.
This is based on the expiring business leases and businesses choosing not to re-new them. Which raises an interesting point.
There is no doubt that business rates are a burden for retailers. However, I believe this is only part of the picture. Landlords also play their part in the high street’s decline.
Investor Landlords obviously want top-dollar for their property investment and when the time comes to re-new leases it is argued that the price is too high.
2015 is a potent year for renewals. According to real estate analysis firm MSCI – approximately 43% of shopping centres leases and 37% of high street tenancies are due to expire by the end of 2015.
Some large retailer, Homebase and B&Q and the Arcadia group have already seen this as an opportunity not to re-new.
I do hope this is an opportunity for struggling independent retailers to re-negotiate a better deal, rather than seeing, as we have before landlords preferring to see an empty store than accept a realistic offer.
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