One in six firms falls into rates arrears - plus all the latest property news
Posted by The Oracle Group on 5th August 2019 -
RETAIL
One in six firms falls into rates arrears
Research by business rates consultancy Altus has estimated that almost one in six businesses in England have been issued a summons for non-payment of business rates in the past year. Robert Hayton, head of UK business rates at Altus, said increases in business rates were having a detrimental effect on the economy, saying major retail and hospitality businesses “are reducing their estates and headcount, often citing the high level of rates as a contributory factor.” In total, the firm found that around 190,000 businesses, over 500 a day, were issued a summons last year, with the London boroughs of Richmond-upon-Thames and Wandsworth worst-affected, with more than a quarter of firms taken to magistrates’ court. Outside London, urban areas in Birmingham, Manchester, Liverpool and Leeds also had high numbers of firms struggling with their rates bills. Mr Hayton said a “tax stimulus is desperately needed” to address the issue.
Spudulike shuts up shop
Baked potato restaurant chain Spudulike has closed all 37 of its takeaway branches, with all 298 employees made redundant. The business collapsed after failing to secure backing from landlords for a rescue restructure, with a CVA rejected and attempts to find a buyer failing. Landlords said they were shocked at the scale of rent cuts being demanded by Spudulike, as they were much more severe than the reductions that other companies had sought.
The challenge facing shopping centres
Louisa Clarence-Smith in the Times examines the pressures which are being placed on shopping centres as they seek to remain in the retail spotlight. Mark Robinson, co-founder of Ellandi, which manages more than 20 shopping centres, says the industry is at the start of a “de-malling”, adding: “It means taking capacity out of the market by demolishing excess malls. We are working on a project at the moment to demolish one in a town centre and to reinvigorate the one that’s left.” Allan Lockhart, CEO of New River Reit, which owns more than 30 shopping centres, adds that there is an “oversupply” of retail space in Britain. Mr Lockhart notes that New River is introducing alternative uses to its centres, such as budget hotels, flats, leisure operators and medical centres.
FIRMS
Prefab homes continue to generate losses
Legal & General has reported another loss in its modular home building division. L&G Homes Modular made an operating loss of £20.6m last year. In 2017, the firm reported an annual loss of £46.2m. The division aims to build 3,000 properties a year. L&G invested £23.2m in the venture during the year and has injected more than £90m into the business since it was established in 2015. L&G said: “Our business plans [foresaw] a number of years of upfront investment would be required to develop the products and processes required to enable the business to deliver profitably at scale.”
Retirement flats bring fortune to Churchill
Retirement housebuilder Churchill is celebrating a record year after selling more flats at a higher average price. Sales rose 11% to £208.6m in the year to the end of June, while pre-tax profits were up 7% to £55.2m. The average sales price was £314,000, and profit margins improved because it cut incentives for customers. Churchill will pay a £9.5m dividend to its owners, the McCarthy family, after selling 584 flats in its developments.
Socotec stake sale planned
Rothschild's private equity arm is planning a sale of its 20% stake in Socotec, which could see the construction services provider valued at more than £1bn. The company would remain majority-owned by Le Pain Quotidien owner Cobepa.
Appointments
Hardies Property & Construction Consultants has appointed chartered quantity surveyor David Alexander as an associate in its Edinburgh office. Elsewhere, Knight Frank has appointed surveyor John MacArthur as an associate in its building consultancy division in Scotland. Finally, regeneration specialist Engie has announced two new appointments to its senior management team in Scotland. Paul Genoe will take up the role of commercial director, with Gareth Edwards becoming operations director.
HOUSING
UK housing market offers some stability
George Buckley, chief UK economist at Nomura, notes that prospects for interest rates look to be on the upside as they cannot realistically fall too much from their present level. And in order to keep repayment/income ratios unchanged with rising interest rates, “we would need to see lower, not higher, house prices”. Mr Buckley expects limited housing supply relative to population growth to underpin prices, while there is little evidence to suggest that central banks are on the brink of raising interest rates sharply. And in the event that central banks globally are forced into another round of quantitative easing, it could support asset prices - including housing markets.
RENTAL
Short-term letting regulation proposals
John Boyle, director of research at Rettie & Co, comments on the Scottish Government’s consultation on future regulation for the short-term letting sector. Mr Boyle believes regulation should focus on commercial letting rather than sharing and swapping accommodation, and there needs to be a registration scheme so that activity can be monitored. There also needs to be investment into monitoring and evaluating the impacts of the sector, and regulation such as a licensing system must put short-term letting on the same footing as longer term letting on safety standards. Finally, any proposed measures need to be adequately piloted to assess impacts.
CONSTRUCTION
Ashwood in good position
Construction firm Ashwood Scotland has built up £10m worth of contract wins ahead of its 20th anniversary. The Bathgate company recently secured fresh deals with clients including City of Edinburgh Council, University of Edinburgh and Edinburgh Zoo. MD Archie Meikle said: "Since starting out in a single person office 20 years ago, we have turned over in excess of £100m and completed over 400 projects. We are excited by our plans to further grow and develop the business."
Construction wages continue to rise
Earnings for freelance tradespeople in the construction sector rose last month, according to latest figures from Hudson Contract. Analysis of July payroll data for more than 2,200 construction companies in England and Wales revealed a 3% month-on-month increase to an average of £920. It follows 6.8% growth in June.
TAX
Taxpayers' Alliance: Death getting dearer
Research published by the Taxpayers' Alliance shows that inheritance tax and probate fees are driving up the cost of death, with the Government set to receive £5.35bn from relatives of those who pass away this year and next. The Cost of Death report notes most estates do not pay inheritance tax and highlights that while the cost of death varies, the average cost for homeowners in England is £405, with this covering probate fees, land registration fees and death certificate costs.
MORTGAGES
NatWest best rates
A new set of rates on NatWest's refreshed range has sent many of its products to the top of Moneyfacts' ranking of residential mortgages. The lender’s two-year variable mortgage now offers market-leading rates of 1.24% until October 2021, while its fixed two-year deal offers 1.28% until the same date.
INFRASTRUCTURE
New hospital may never open
The new £150m Royal Hospital for Children and Young People in Edinburgh may have to be "ripped down" amid safety concerns, a senior trade union official has warned. Tom Waterson said drainage at the building is a more pressing matter than the ventilation issues which saw the postponement of its official opening. He also claimed NHS Lothian had paid millions of pounds in a settlement to help resolve some of the problems. The new site cost about £150m to build.
ECONOMY
Poor families more vulnerable to economic shocks
A report from the Resolution Foundation has warned that growing numbers of families on low and middle incomes will be less able to weather possible economic shocks than they were before the 2008 financial crisis. A decade of weak income growth has left more families with savings to draw on in an emergency, and less non-essential spending that can be cut.
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