Little reprieve for offices or manufacturing sectors- or for landlords with empty properties says Colliers.
The Chancellor announced a massive package to help businesses suffering from the impact of COVID-19 yesterday which has been warmly welcomed by those in the retail and hospitality industries.
According to John Webber Head of Business Rates at Colliers International, “At last some news we have been waiting for. The Chancellor said that the 12-month business rates holiday will be extended to all firms in the retail, leisure and hospitality sectors, whatever their size. He has also promised up to £25,000 funding grants for smaller businesses in the sector and has introduced a package of £330 billion of guaranteed loans (15%of GDP) for any business that needs it. The Government seems to be putting its hands in its pockets and finally delivering what we and our retail and hospitality clients have been calling for – support for all in the sector- not just the smaller players.”
Webber’s praise for the Chancellor, does however hold some caveats. Some business rates experts have pointed out that State Aid restrictions might apply to companies receiving the amounts they need. The EU has said that COVID-19 measures should be limited to euro 500,000 per compan, which could prove to be an impediment to the 100% business rates relief extending as far as the Chancellor intends.
Webber suggests that businesses who are worried they might fall into this category simply don’t pay their business rates bills when the bills fall at the beginning of April and deal with any fall out later.
“It’s a matter of survival or breaking point for many companies. We are advising our clients to stop their rates payments now and grasp the offer of a business rates “holiday” with open hands. In such critical times, we believe it would be unlikely such limits would be strictly enforced and if there were attempts further down the line, businesses would lobby the Government to keep its word to them."
Webber has more concern for those sectors, NOT mentioned in the Chancellor’s “give away”. “Nothing was said about the manufacturing sector or indeed the office sector either. Many companies lie outside the retail/leisure/ hospitality sectors -those in financial or professional services, media on one hand to estate agents and nurseries on the other. One can only hope the Chancellor has these in sight for the next round of supportive measures he contemplates.”
“And the Chancellor also failed to cover what happens with empty properties. If tenants go bust, landlords not only loose rents, but have to pick up empty rates bills, whilst the property is unoccupied after a few months “rates” holiday. Many landlords cannot afford this, particularly owners of shopping centres or high street shops and there seemed to be no thought about these- nor the pension fund monies behind some of them. We would suggest the Government makes some recognition that an empty property is not usually by design, but by negative market conditions and makes some allowances accordingly”
“Overall, however," concludes Webber, “The Chancellor’s speech is a step in the right direction. He does finally appear to have had his ear to the ground and we welcome these immediate relief measures as a lifeline to one of our most hard-pressed sectors in these difficult times”