2016 Budget Comments from Tim Matthews, CEO, Blue Marble Asset Management:
Cut In Business Rates – Boost for Business Starter Units
Businesses with a property with a rateable value of £12,000 and below will pay no rates, while businesses with a property with a rateable value between £12,000 and £15,000 will receive tapered relief from 1 April 2017. Mr Matthews says: “This is excellent news and will benefit occupiers of small offices and industrial units by reducing their property costs. Making a significant reduction in occupational costs could drive up demand for smaller units, increase rents and make it more cost effective for investment in the development of new business starter units.
“The changes mean that occupiers will pay no business rates in city centre offices of around 500 sq ft, paying rent of say £25psf, in out of town offices of around 1,000 sq ft, at a rent of say £12psf, and in industrial units of 2,400 sq ft at a rent of say £5psf.”
Changes to SDLT (Stamp Duty Land Tax) For Commercial Property – Small Investors Win, Institutions Lose, Subduing the Investment Market
Mr Matthew says: “The introduction of tax band rates for Commercial Property SDLT benefits smaller investors as lot sizes of under £1 million will pay less tax. However, the main impact will be on vendors of properties over £1.05 million who will be hit with higher costs being deducted from the price by the purchaser. At £2 million this is the equivalent of an additional 0.5% of the purchase price, and at £10 million a further 0.895%.
“The effect may be that fewer larger commercial properties come to the market, further subduing investment trading activity, which is already down compared to 2015. Property owners and managers will have to work harder to add value in order to recoup higher purchase costs.”
Failure to Scrap Empty Buildings Rates – Missed Opportunity To Boost Development
Mr Matthews says: “The Chancellor continues to tax failure by missing the opportunity in the Budget to scrap the payment of business rates on empty commercial buildings. To make matters worse there is no provision to extend the 18 months’ rates relief for unoccupied new builds beyond 30 September 2016, hitting hardest developers building in the less economically active areas.”
Owners of empty offices and shops still have to pay business rates after three months and owners of unoccupied industrial buildings after six months.
Tim Matthews has more than 30 years’ experience in commercial property, 20 of them in senior positions, working in consultancy, development, investment and asset management for national commercial property agencies, developers and housing associations. He became Chief Executive of Blue Marble Asset Management in 2010.
Based in Birmingham and Worcester, Blue Marble Asset Management is a real estate asset management specialist which presently has more than £60 million of property assets under management. It works for a select range of clients including investment businesses, high net worth individuals, trusts and family offices. Its business is based on taking a holistic view of each of its property investments.