Its election time! The commercial real estate sector already faces many challenges, such as the Energy Efficiency Regulations, seemingly endless rising costs, and continued threats from online retail. With the prospect of change around the corner, we look at the Royal Institution of Chartered Surveyors (RICS) response to the political parties’ manifestos on all things commercial property….
Business Rates, Small Business and the High Street
Everyone agrees that business growth is good for everyone. One major issue is Business Rates – created with the aim of funding local services and promoting community development these taxes are essential, but they are criticised for their high costs, disproportionate burden on small business, often incorrectly calculated figures, and negative impacts on the high street, investment and property values. Primarily, the business rates system is no longer doing what it was intended to do and is, arguably, blighting towns. The Government has been aware of this issue for years… but reform is yet to be introduced.
Conservative Party’s Approach
The conservative manifesto aims to stimulate development and streamline processes.
- Support Package: A £4.3 billion business rates support package over the next five years aims to assist small businesses and rejuvenate high streets.
- Freeports and Retention Zones: Expansion of Freeports and Business Rates Retention zones, with councils retaining all business rates growth within a defined zone for 25 years to finance infrastructure and local industries.
- Endowment Funds: Providing 105 towns with a £20 million endowment fund for local revitalisation.
- Community Ownership: Extending the Community Ownership Fund to help communities take control of vital assets.
- Investment Zones: Backing Investment Zones with £160 million to catalyse local growth.
- Planning Laws: Reforming planning laws to support local market days and boost shopping centres.
- Build 1.6M homes: Regenerate urban areas and build on previously developed land.
Labour Party’s Approach
Labour intends to make the business environment more equitable, sustainable, and conducive to investment and development:
- Business Rates Reform: Replace the current business rates system with a fairer alternative that levels the playing field between high street and online businesses
- Encourage Investment: Cap the corporation tax rate at 25%. Retain the Annual Investment Allowance for small businesses but provide clarity on what qualifies for these allowances to improve investment decision
- Incentivise investment: A National Wealth Fund to invest in future/emerging industry and generate 650,000 jobs, and to support entrepreneurship.
- Revitalise High Streets & support small business: Create banking hubs to ensure small businesses have ready access to cash, and introduce legislation to stamp out unfair practices such as late payment of invoices. Cut energy bills for small business. , crack down on antisocial behaviour through town centre police patrols.
- Urban Rejuvenation & Environmental Sustainability: Enable communities to buy and revamp beloved assets, and bring empty properties into reuse.
- New Towns: Build a new generation of towns and large-scale urban regeneration projects in partnership with local leaders.
- Build 1.5M homes: Maintaining a brownfield-first approach, and ensuring development benefits local communities.
Liberal Democrats’ Proposal
The Lib Dems want to focus on creating a more business-friendly environment and promote sustainable urban development.
- Commercial Landowner Levy: Abolish business rates and replace them with a Commercial Landowner Levy to boost small businesses and empower job creation, particularly on the high streets.
- Support Entrepreneurs: Back small businesses and replace business rates to help high streets thrive.
- New towns: Support faster development rates and the creation of new towns.
- Encourage regeneration projects: including commitments to brownfield development.
RICS Response and Recommendations
RICS acknowledges the shared objective among political parties to reform business rates to reduce burdens on businesses and stimulate economic growth. However, the scale and approach of these reforms vary. RICS advocates for:
- Lower Business Rates: Aligning business rates with other global local taxation systems to create fairer funding for local services.
- Simplified System
- Transparency: Provide clear information on how valuations are calculated and the supporting evidence.
- Reduced Administrative Burden: Enhancing IT and digital services for efficient administration.
- Professional Valuation and Administration: Ensuring adequate resources for the Valuation Office Agency and billing authorities.
- Sustainable Investment: Incentivising investments that support the net-zero transition and sustainability.
About SMC Brownill Vickers
SMC Brownill Vickers are the region’s largest independent multi-faceted firm of Chartered Surveyors and Commercial Property Agents, currently celebrating their 140th year in business and are proud of their Sheffield roots. If you are looking for expert commercial property advice, or are seeking commercial premises, then get in touch with our team.
