Business rate hits struggling UK High Streets hardest leading to more closures

Finding a new retailer for a prime spot in Blackpool town centre used to be easy.

In the 1980s and 1990s, firms would have been fighting over the keys to 18-22 Victoria Street, a large, modern two-storey unit directly opposite the shopping centre. Not any more.

Until last month, the property had been rented to Topshop and Topman. But their owner, Sir Philip Green’s Arcadia group, walked away when the lease came up for renewal. His shops have been struggling to keep up with the competition, and dozens, up and down the country, are being closed.

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“We are having difficulty attracting any interest, never mind a national retailer,” says Paul Moran, a ratings surveyor whose company, Mason Owen, is tasked with finding a new tenant.

Business rates, he says, were a factor in Arcadia’s decision to pull out, and they’re now a big barrier to someone else moving in.

“The first thing tenants look at are their outgoings. And when they see the rates bill, they will be put off by that. Normally you’d expect to be paying 50% of your rent in rates, but the rates bill in this shop is dramatically higher than that.”

With retail in turmoil, pressure is growing for change. So what are business rates and why are they a problem?

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Business rates are a kind of council tax for commercial property. All sorts of premises have to pay them, from offices, warehouses and pubs, to power plants, train stations and shops.

Bills are worked out based on the government’s estimate of how much the property would cost to rent on the open market. Businesses have to pay the tax regardless of whether the space makes any profit or not.

As a rule of thumb, your business rates bill is now typically half of your rent. That’s a big financial burden in itself for retailers with lots of shops. But many of our national chains aren’t even being charged the right amount to begin with. They’re paying millions of pounds more in rates than their rents would imply.

Properties get revalued every few years by the government to make sure the occupiers are paying the correct sums. Some bills go up and some go down. The last revaluation was in 2017.

For towns like Blackpool, this should have been good news because retail rents had collapsed. Their business rates bills should have dived as a result, bringing some relief to a town grappling with too many empty shops and years of government austerity.

But here’s the problem. Changes in bills, both up and down, are phased in gradually over several years to help businesses adjust. It’s like a shock absorber, and it’s called “transitional relief”.

The system is good news if your bills are going up, but not so good if you’re in a property due a big reduction. It’s a bit like being told you’re due a tax cut, but your bill will only be cut incrementally over five years, and you may never get the full reduction.

It works like this because the government wants to make sure it receives the same amount in business rates in real terms, or adjusting for inflation, each year. So rate rises and decreases must balance. This is an England-only policy.

And it’s the largest stores occupied by big chains that are the most affected. Blackpool’s 18-22 Victoria Street is a good example.

Source: BBC News

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Mystery property with no access sold for £1

Previously published on my blog to be sold on auction for a guide price of £100, this mystery town centre property with river frontage and far-reaching views has been snapped for a cool £1 at auction.

Although it might seem like a bargain, the drawback is there is no way to get into the 12sq m first-floor space.

Property in Wisbech

However, the room, wedged between two properties and suspended over an alleyway in Wisbech, Cambridgeshire, appealed to one bidder whose hand shot up when the £1 price tag was announced.

The guide price of £100+ was dropped to £1 at the last minute.

The unusual property is in a terrace of old buildings, believed to have been built as granaries or shops in the 16th Century on Nene Quay.

It is bricked up from both sides and even the auctioneer had not been in to see it.

Fenland District Council, which has owned it since 1966, put it up for sale alongside other “surplus properties” with Norwich-based auctioneers William H Brown

There is no record of anyone ever having used the room and the contents and condition remain a mystery.

Property for sale in Wisbech

When it first went on their books, auctions partner Victoria Reek described it as “certainly one of the weirdest ones we’ve had at auction” and admitted it was “probably just full of cobwebs”.

She said the vendor instructed the auctioneer to remove the £100 guide price just before the auction opened.

“So we told bidders the first one to offer £1 could have it – one gentleman put up his hand and it was gone – all done and dusted,” she said.

It is not yet known who bought the inaccessible room.

Source: BBC News

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Primark claims to be greener than shopping online

Fast fashion has a bad reputation among environmental campaigners who accuse it of fostering a wasteful culture.

But leading chain Primark has hit back at its detractors, saying shopping on the High Street is better for the planet than buying online.

 

 

The boss of AB Foods, Primark’s owner, told the Times that its efficient global supply chains meant it was less polluting than online delivery vans.

However, George Weston’s assertions are questioned by energy experts.

Mr Weston told the newspaper: “Far from being a problem, we are a solution.”

He said Primark, which does not have an online shop, had “one of the world’s best supply chains”.

“We don’t air freight the goods, we ship them, which has far lower emissions,” he added.

Mr Weston said delivery vans “puffing their way up and down a street” were more damaging than people collecting products in-store, which was “more environmentally sustainable”.

He dismissed concerns that Primark was selling disposable clothes, saying his customers were not “buying them to wear just once”.

Source: BBC News

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Dennis Bebo – MSC, BSC, DEA, CeMAP

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UK Greetings card chain Clintons in survival talks with Landlords

Greetings card chain Clintons is considering shop closures and rent cuts as part of a survival plan.

The retailer, which has about 2,500 staff, is in restructuring talks with landlords in another sign of the High Street crisis.

A spokeswoman told the BBC no decisions have yet been made.

Clintons was responding to reports on Sunday that it wanted to close 66 out of 332 shops, with landlords slashing rents on most of the other stores.

The restructuring would involve a controversial scheme known as a company voluntary arrangement (CVA), an insolvency process that allows companies to continue trading while pushing through closures and rent cuts.

A Clintons spokeswoman said “discussions are continuing with our landlords but no decisions have been made”.

But she declined to comment on a Sunday Telegraph report that the company told landlords 90 of its shops were loss-making and that sales were expected to continue to decline.

Source: BBC News

UK Babycare retailer Mamas & Papas has gone into pre-pack administration

British maternity chain Mamas & Papas has reached out to administrators as part of an effort to stem losses in a ‘pre-pack’ deal with administrators Deloitte, resulting in six store closures in the UK and dozens of job losses.

The struggling retailer is the second babycare brand to call in administrators this week after rival Mothercare announced the closure of all 79 of its UK stores on Tuesday.

The ‘pre-pack’ deal between company owners Bluegem Capital, which acquired Mamas & Papas in 2014, and administrators Deloitte aims to cut store losses by selling off assets to other companies within the Mamas & Papas Group.

Six unprofitable stores in Aberdeen, Preston, Milton Keynes, Lincoln, Leamington Spa and Fareham have now closed with 73 members of staff losing their jobs.

A further 54 jobs are at risk as the store looks to “review and simplify” operations at its head office in Huddersfield.

The company says its 26 remaining stores will continue to trade as normal and online orders are unaffected by today’s announcement.

Riccardo Cincotta, Executive Chairman of Mamas & Papas, said: “These actions are always difficult but they are also necessary in a challenging market to ensure Mamas & Papas achieves its considerable future potential.

“We remain fully focused on maintaining our position as the UK’s most popular nursery brand.

Source: Manchester Evening News