The Financial Times has an article today regarding the increase in the number of High Street shops being offered on a £1 rental. Recent changes to Business Rates means that landlords are responsible for paying them even if the shop remains empty, so better to avoid the expense even in if means (almost) no rental income.
There is lot of resentment about the Business Rates tax. Although based on the rental value of the premises (typically 40%), it is revised only every 5 years and then increases with inflation. Retailers can expect a 5.6% increase next April at a time when traders are struggling to even maintain their sales.
Currys and PC World owner, Dixons admits that it is paying a nominal £1 rent on a ‘small handful’ of it’s shops, Card Factory has also confirmed that it is paying ‘Business Rates only’ on a few of it units.
Although Card Factory are still expanding in the High Street, many well known names such as The Arcadia Group, Mothercare, Thorntons as well as Dixons are walking away at the expiry of their High Street leases in favour of trading from Shopping Centres, Retail Parks and, of course, developing their on-line sales.
My previous article ‘Recession or Evolution‘ touched on the changing face of the High Street and local councils need to adapt their policies, such as change of use, to recognise this and avoid the destruction of town centres.
Until that time comes, perhaps your business is suited for the High Street and if paying ‘Business Rates only’ makes it cost effective to expand (even on a short lease) then now may be the right time to start negotiating.