Business rates reform could unlock £1.8bn of development over the next five years, according to a new report.
Research launched by the British Property Federation, the British Council of Shopping Centres and the British Council for Offices has found that when business rates rise, landlords come under pressure to lower rents, which reduces the viability of developments.
Written by Regeneris Consulting, the report found that the British economy may have already missed out on £670m of development over the past three years as a result of the tax.
This is because about 75% of the tax burden has been passed on to landlords, with occupiers bearing about 25% of the cost.
Ion Fletcher, director of policy (finance) at the BPF, said: “Business rates are often seen as a cost for occupiers, one that gets in the way of expanding their businesses. This research shows that business rates also harm landlords and in particular they discourage new economically valuable development.”
Regional markets were found to be more severely affected than London by the relationship between rates and rents, because the demand supply balance is more in tenants’ favour.
