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Commercial Service
Charge
Property Solutions Ltd (PSL), the UK’s leading service charge consultancy
based in Bristol, is supporting a ground breaking study into the UK’s
commercial service charge industry. The study is being undertaken by two
London Business School MBA students, Avanti Patel and Joysy John.
The issue of commercial service charges can cause disputes between landlords
and tenants. The study entitled ‘Options for Change’, will look
at what options are available to the industry to improve the management
of buildings, reduce the incidence of disputes between landlord and tenant
and improve value for money.
As part of the study, the students will be conducting a stakeholder analysis
of leading commercial property landlords and owners, tenants, managing
agents, trade bodies, educational establishments and industry advisors.
They will be seeking the views of stakeholders and senior sector figures
on the state of the industry in order to present an objective report to
be published in April 2008.
PSL managing director, David Barrass says: “The results of this study,
when made public next year, will give all industry stakeholders an independent
view of the issues that undoubtedly exist in the sector.”
Commenting on the study, Joysy John says: “This is a very exciting
project to be undertaking for our MBA. It has real potential to define
and direct the future of the UK’s service charge sector and we welcome
contributions from as many stakeholders as possible involved in commercial
service charges.”
Her research partner Avanti Patel continues: “Our aim is to determine
a strategic view of the options available to the industry; to address
and make recommendations for reducing and, ultimately removing, conflicts
of interest that exist, improve value for money and limit disputes.”
New Tax will cost Bristol
A planned change in taxation for empty offices will cost Bristol property
owners more than £3m a year and create a barrier for regeneration.
This is the verdict of King Sturge.
According to Ian Wills, the partner heading King Sturge’s office
agency team in Bristol: “The Government’s plan to end the practice
of halving business rates on empty office buildings and no rates on empty
warehouses, from next April will put a brake on new regeneration developments,
and cost existing office buildings at least £3m per year in extra
tax.
Bristol has seen a much-need surge in office regeneration. This means
that, at any given time, there is about a million square feet of
Until now, empty offices have been charged at half the normal business rates; but, from next April, the Government wants to end that formula.
With business rates for prime office space currently charged at £8 psf per year, it means that the Government will grab at least £3m extra tax while those offices remain empty”, said Mr Wills.
The Government plans no change in the current arrangement, whereby new or empty business buildings remain exempt from business rates for the first three months; but their proposal to charge full rates after the third month is a punitive new ‘stealth tax’, according to King Sturge.
“Even worse for the West is the fact that the Government now plans to end the convention of providing 100% rates relief on empty historic listed buildings. This region has many listed office buildings that take time to find an appropriate occupier, willing to accept the constraints that go with occupying a listed historic building.
The result of this new tax-grab will be an inevitable brake on encouraging new development of workspace, and make it even harder for owners of listed buildings to keep them available for work-space, rather than converting them into flats”, said Mr Wills.
It is a similar picture for industrial and warehousing buildings, also affected by the planned new tax.
Rob Cleeves, who heads King Sturge’s industrial team in Bristol said: “While there remains a shortage of both office and industrial space to meet market demand, it is a fact that Greater Bristol currently has about 3 million sq ft of industrial buildings vacant whilst awaiting tenancy agreements.
At an average business rates figure of £2.50 psf, with industrial buildings tending to remain empty for about nine months, that will now mean an extra penalty of £5m per year for developers”, said Mr Cleeves.
According to King Sturge’s managing partner in Bristol, Jeremy Richards: “At a time when Government policy is forcing local councils to re-allocate workspace land to the need for housing, this area has a very real shortage of new workspace. By penalising owners of offices and industrial buildings waiting for new occupants, the Government’s new rates plan runs the risk of discouraging new workspace development and regeneration.
It is especially harmful to the West that this tax plan will end rate relief for empty listed buildings”, he added.