Colliers Business Rates team urge local authorities to show flexibility to businesses as they return to the office.
The Government must make sure it is not accused of showing double standards in terms of its treatment of office occupiers compared to some other sectors in the market, says John Webber Head of Business Rates.
Whilst businesses in the retail, hospitality and leisure industries have been given a one-year rates holiday and are supported by various grants to help them cope through the COVID-19 pandemic, businesses who use office space have received no business rates holiday, even though since 23 March many have been prohibited from occupying their offices by law. And as the lockdown has started to lift, many offices are still empty or only just becoming partly occupied.
Those businesses that therefore did not pay their April and May rates bills - on the grounds that their offices and work locations were empty - are now being sent reminders by some local authorities, even though often no one has been going into the offices to receive them.
And two or three weeks after sending a reminder the Billing Authority will be sending a final notice and when this occurs a tenant loses the right to pay by instalments over the next year and must pay the bill in one large hit.
Colliers International’s Business Rates Team has urged local authorities to be mindful as to how they behave in the weeks ahead. The team has been campaigning for a three months business rates holiday for office occupiers since the start of lockdown and also has been negotiating on behalf of its clients with the various billing authorities across the country. Whilst some are sympathetic to businesses’ plight and have pushed back the timetable for collection or delayed taking any recovery action, others are pursuing a more aggressive strategy.
“Many of our clients in the office sector have been badly impacted by COVID-19, but have received little or no assistance.” says Webber,“And some of our ratepayers struggling with payments have asked for payment deferrals spreading payment over the next 9 months of the current rates year, enabling them to protect their cashflow following a period of little or no income. Whilst most local authorities have been understanding and very proactive in helping, a small minority have refused any negotiation, demanding full payment now.”
One local authority has written saying it“is not offering deferment of business rates as a way of supporting business through this difficult period.Business rates is a national scheme and we are required to continue to follow the government lead in terms of the nature and extent of the support that we can provide”
Webber continued, “This is a short sighted attitude. On one hand we have a Government bending over backwards to support the retail sector and not just in terms of rates and grants, but also by bringing in the three-month government ban on landlords evicting tenants for non-payment of rent, or from issuing statutory demands in court to force tenants to pay or face winding-up orders. In many cases, this has given tenants crucial reassurance that they can cut a deal with landlords to reduce rent and preserve precious cash.
Yet when the office sector asks for the smallest concession – to purely delay (not avoid) its business rates payments, no flexibility is given.”
Colliers have spoken to MHCLG about this but have been told that each billing authority has the right to pursue which ever policy it wishes, and Central Government will not get involved. At a time when many businesses working in the office sector are under threat, Colliers thinks this isa strange stance to take and goes against the Government mantra of flexibility, common sense and support to business.
“We still believe a three months rates holiday would have been the most sensible decision to cover this period of lockdown" concludes Webber, “but failing that local authorities need to show flexibility and Central Government must encourage them to do so. Otherwise we will find more office occupiers struggling to pay their business rates bills, with the inevitable negative consequences for both the economy and business growth in this already difficult period of economic uncertainty.”