November 25th, 2014. Ben Lloyd
The Demise of the High Street and What’s Stopping its Recovery
Our great British high streets have seen some ups and downs over the last few years, and the good news is, they seem to be on an upwards turn once more. The bad news is that high business rates are still keeping some shops empty.
Business Rates and the High Street
According to the Local Data Company, the UK’s high streets now have around 10,500 empty stores; the most there has been for three years. And little is being done about this, as the Government refuse to offer a change of use for these buildings due to the risk of losing out on potential business rate payments.
In fact, if all the empty shops in England and Wales had been filled, in the last 12 months the authorities would have received an extra £131 million.
Many campaigners are acting out against this. They believe that a change of use would allow landlords to help rebuild towns and regenerate struggling areas.
Currently, if a business premises has been empty for more than three years, a landlord can appeal for business rates on the property to be lifted by the Valuation Office Agency. This can be done on any commercial premises, but the government are not keen for this to happen as it can result in budget shortfalls.
Sadly however, by the time this three year deadline has passed, an appeal for a change of use is no longer affordable and business rates are set to rise by £27 billion this financial year too.
As a result of this, retailers are calling for a reform of business rates, but ministers say this will not happen for at least another three years. But with the Autumn Statement due by Christmas, the pressure is on to pay notice to the attention this issue has raised.
The British Retail Consortium have commented:
“If we fundamentally reform the business rates system then we can breathe life back into many of these empty shops now. Let’s not wait until 2017 to address one part of a wider problem. Retailers will tell you that high rate bills are one of the main reasons why they have to shut up shop.”
Helping the Economy
Chancellor George Osborne is feeling the pressure, as the manufacturing organisation EEF, among others, say he should use the Autumn Statement to help fund innovation to challenge overseas rivals, and boost the British economy.
This, on top of the attention of business rates, is quickly making ‘money’ one of the country’s most debated issues.
Terry Scuoler, EEF chief executive, said: “We have seen a turnaround in the economy. The Government must continue to drive forward with policies which support long–term growth.
“Manufacturers are reliant on road networks and implementation of those projects left on the ‘too–difficult list’ for too long is an urgent priority. In addition I hope the Government enhances funding for innovation centres, bringing industry and universities together.”
Some believe that money is not the answer, but encouraging shoppers back to the high street is. The British Retail Consortium have said:
“Encouraging shoppers back to the high street is crucial in reducing the number of vacant properties.
“Some local areas need to encourage more pop–ups and coffee shops and use empty premises as community spaces or arts venues.
“Consideration needs to be given to how people want to use their high street. We also need to make investment in property improvements attractive for businesses and the chief way to achieve this will be through business rates reform.”
Footfall figures vary vastly across the country, but have recently seen a hit in comparison to year-on-year results as demand for winter clothing had decreased thanks to the warm weather the country has been experiencing. It is predicted that there will be an 8% rise in footfall this Christmas, but this won’t be felt on the high street, instead out of town retail parks will get all the attention.
If you own a high street store or commercial property we’d love to hear your opinion on this issue. Do you think business rates are too high? Tweet us with your thoughts.
Article By Ben Lloyd
November 25th, 2014
Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.
Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.
Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.
Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.See more articles by Ben