It says a lot about the government’s approach to property when with one hand it helps and with another it hinders.
Ministers are positively pushing the idea of converting empty high street shops into much-needed homes, with a consultation already under way by planning minister Nick Boles. Yet on the subject of business rates revaluation – one thing that could help struggling landlords and high street retailers – the government is not for moving.
Our own research, gathered by EG’s retail specialists, shows that if all of the UK’s 43m sq ft of vacant high street shops were converted today, up to 52,000 new homes could be created (p27). Obviously it is not that clear-cut and simply lifting planning permission rules won’t get around actual market demand or building suitability.
Unsurprisingly, the industry has greeted the potential retail-to-resi plans with healthy cynicism, as our feature on page 39 reveals. There are already fears that local authorities are unlikely to welcome the changes, which could undermine their local plans and rob them of much-needed cash under the new business rate retention scheme. Councils could yet be the biggest stumbling block to any serious retail-to-resi conversions. But with mortgage approvals at a three-and-a-half-year high and house building 100,000 homes a year short of the recommended target, every little helps.
Sadly that can’t be said for business rates. The government’s controversial decision to delay the 2015 revaluation is creating continued hardship for landlords and occupiers. Ironically, as the government attempts to revive high streets through its retail-to-resi plans, it is contributing to retail vacancy numbers by keeping business rates pegged to 2008 rent levels.
The rates are now at such an unsustainably high level that they are stymying the very growth the government is desperate to see. As our analysis (p29) and Liz Peace’s comment (p34) show, calls for the decision to be reversed aren’t going to go away.
Next month, retail turnaround expert Bill Grimsey is expected to add to the pressure with the launch of his alternative to the Portas Review for reviving the high street. Business rate revaluation is expected to be high on his agenda. The government has already listened and acted on the Portas recommendations, spawning the retail-to-resi plans, let’s hope they listen again and we see a reverse of this perverse decision.
¦ The long-awaited UGL and DTZ demerger was finally announced this week. In a podcast interview, UGL chief executive Richard Leupen talks candidly about the reasons behind the split, just 20 months after UGL bought the agent.
The question for many will be what shape the new DTZ will be in when it emerges from the Australian giant. Old DTZ will make up just a third of the new firm. The rest will be a A$1bn-plus facilities management business, making it potentially a global player able to chase the mega mandates bagged by the likes of CBRE and Jones Lang LaSalle. But there is much to be sorted between now and the final demerger date in 2015, from its sizeable debt to who will lead the company into a brave new global world. No doubt the industry will watch this latest DTZ episode with fascination.
¦ On behalf of Damian and the team, I would like to apologise to this year’s EG Awards judges: we have had a record number of entries, so brace yourself for some extra-curricular reading over the summer. Judging takes place in September, a published shortlist will soon follow and the gongs themselves will be handed out in December. Good luck to all those who entered.
