Chancellor Rishi Sunak is under renewed pressure to announce further business rates support from 1 April when the current relief runs out.
Huge upheaval is expected in the retail sector with the acquisition of Debenhams by Boohoo and Asos’s purchase of Arcadia’s Topshop, Topman, Miss Selfridge and HIIT brands earlier this week. This will lead to around 15m sq ft of retail floor space becoming vacant, assuming the stores are surplus to requirements in a deal that focuses on brand values rather than physical locations.
The landlords of these stores will potentially have to face business rate liabilities of around £141m in annual empty rates, after a short exemption period, unless new tenants can be found – a hard task in today’s lockdown climate.
Around £12bn has already been allocated by the Government on business rates support for the UK to try and protect retail businesses against the economic impact of coronavirus. But landlords of commercial property were specifically excluded from the scope of the current rates’ holiday which is due to end on 31 March.
Retailers are now calling for a further rate-free period to reflect the additional lockdowns in 2021 and the uncertainty of when and how restrictions will be lifted.
The Spring Budget (March 3) may be the obvious tie for the Chancellor to confirm an extension to the business-rates holiday but that leaves only 4 weeks before the new financial year and the end of the current business rate holiday.
Scotland, where business rates are devolved, has already announced an extension to the current 100% rates relief for occupied properties in the retail, hospitality, leisure and aviation sectors for at least three months from 1 April. However, the relief will no longer be applied automatically but instead be on an application basis.