News
Cedar Dean Group challenges government rate fund

In response to the Government and DCLG’s consultation on the proposed £300m Business Rates relief fund, CDG have made representations. This relates to business occupiers facing hardship as a result of the Revaluation and increases in rateable values from 1st April 2017.

We fully support and welcome the £300m relief fund for business occupiers facing hardship because of the revaluation. However, we are concerned that it falls way short of what is needed and is too centrally defined/capped. Relief should target those experiencing hardship where their ability to trade has been severely affected due to the cost of business rates. This should be regardless of Rateable Value size (currently proposed less than £200,000) since otherwise those with larger RV’s, which could include significant employers and companies requiring support have no access to any relief fund.

Also, it should not be limited to those facing an increase in their bills following revaluation. Business rates are a significant overhead and one that can affect the viability of a business. Relief should be available where there are legitimate business reasons why relief would ensure the viability of that business.

CDG’s alternative proposals are that:

  • All ratepayers should have access to Business Rates Relief regardless of size. The current proposals ignore the largest ratepayers. The larger ratepayers contribute the largest amounts in rates payable and should be listened to and have access to relief where they are experiencing hardship.
  • The Business Rates Relief fund should be split to Local Authorities as per the total amount of Rateable Value within individual Local Authorities and all ratepayers should have access to the fund.
  • The fund could be subject to a call in say the first half of the rating year and an allocation in the second half of the rating year, with this rolling through the Rating List and not limited to 4 years of the list.
  • If individual Local Authorities have surplus funds in a rating year, these to be redistributed to other Local Authorities within the rating year.
  • An alternative is to cap 2017 list increases across the board to those areas particularly hit by increases ie London and the South. Present Transitional Relief arrangements are wholly inadequate and more punitive than in previous Rating Lists. Either a relief fund or cap should cover this or Transitional Arrangements need fully adjusting.
  • Ratepayers facing hardship because of the 2017 Revaluation extend across small, medium and large businesses with the latter being significant employers and contributors to rates revenues. As the proposals currently stand, only those with smaller RV’s and increases can access the fund and significant rates contributors are inequitably not allowed access to a fund which should be seeking to address hardship and business viability regardless of size or increase in rates payable.
  • If you would like to discuss or seek advice regarding business rates or any hardship/relief, feel free to have a chat with our Landlord & Tenant specialist David Ford on 0207 100 5520 or davidf@cdgleisure.com

    Worried about your Rent Review?

    London 2017 is proving to be a very uncertain and unpredictable market in the light of the surprise election, Brexit, terrorism and other related factors which are having impacts.

    It is well known that rents have risen dramatically in the centre of London over the last five years and therefore many operators are worried about their next rent review. The issue is that once these rent reviews pass, normally the landlords will appoint a surveyor to get the evidence for them in the neighbouring area. This will usually involve you needing to employ a surveyor as well which will then take you down a track governed by the RICS which is simply process driven. The RICS, which has for many decades not changed its stance in relation to economic circumstances, does not take into account affordability, and so rents can double, treble, quadruple whether the new tenant can afford it or not and assumes that there would be a plethora of new tenants to take up such rents at the new level.

    Our advice and recommendation to operators is to consider upcoming rent reviews up to twelve months in advance of any trigger date and have honest upfront conversations with landlords based on current evidence.

    What we are doing for many of our clients is taking early action, giving them the current evidence and then approaching directly to try and agree terms based on their economic affordability rather than simply the pounds per square foot and this will often result in a fair increase for the landlords and also avoid hefty costs from the RICS appointed arbitrators and unnecessary delay and increased uncertainty.

    We would like to urge the RICS to look at how they consider the settling of rents, especially in a changing economic environment but our main call is to operators to take early action and to contact us in order that we can support and assist companies through what could be a challenging trading period.

    It is also to be pointed out that if any operators are looking to assign their leases these will need to be assigned once rent reviews are settled and it will be very hard to assign these leases with hefty rent reviews outstanding. The key is to avoid the surveyor scientific route and work on actual real commerciality, obviously with the basis of what evidence has been achieved in the area.

    We actually find that many landlords and asset managers that we deal with are open minded to agree terms with operators they like and they see as being able to work with in the longer term, and are not necessarily committed to achieving the highest rent but actually understand that the right tenant mix should be the focus. However, the driver for many of the landlords’ surveyors is to achieve the highest rent possible as their fees are often linked to this.

    Once again the key is that a strategic proactive approach is needed.

    If you would like to discuss or seek advice regarding your rent review and business objectives, feel free to have a chat with our Landlord & Tenant specialist David Ford on 0207 100 5520 or davidf@cdgleisure.com.

    Strategic Lease Management (SLM)

    Create value across your entire leasehold property portfolio with Strategic Lease Management

    Rising rents and business rates continue to be a huge challenge for commercial property tenants in London and throughout the UK. These challenges have a negative impact on the profitability of a business and in many cases are forcing occupiers to close down their operations. At Cedar Dean we believe the key to delivering savings and realising value on real estate is through a strategic approach to a company’s operational real estate portfolio.

    To date, at Cedar Dean, we have saved our clients over £500 million in leasehold liabilities with our innovative, proactive approach to lease restructuring. Renegotiating leases with landlords, months or even years before they are due, has enabled us to generate significant savings and add value across an entire property portfolio.

    Our team of corporate and property advisors consider each site and business from a corporate perspective and work together to restructure your property portfolio in accordance with our client’s operational requirements, protecting their long term goals and visions.

    For many of the businesses we work with, property costs are their largest expense. As such, it is vital that an organisation strategically reviews its leasehold portfolio in order to not only extract best value, but also ensure that each lease is attractive in terms of lease length, rents and ensuring that all other potentially onerous lease terms are avoided. An attractive leasehold portfolio helps drive long term shareholder value and secure increased valuations in M&A transactions.

    With our team of experts, we can offer a multi-site business the opportunity to outsource the day-to-day management of a leasehold property portfolio, granting our clients more time to focus on operating a successful business and allowing us to work on creating value across a property portfolio that not only could generate savings, but also significantly increase the valuation of your business.

    Strategic Lease Management offers an outsourced, fully comprehensive property service in respect of a multi-site property portfolio, which includes the following:

    — Lease restructuring
    — Rent reductions
    — Rent reviews
    — Lease renewals
    — Early removal of break clauses
    — Return of rent deposits
    — Assignments of leases into a Head Company
    — Lease surrenders
    — Acquisitions and disposals
    — Business rates appeals
    — Service charge audits
    — Building insurance watch