As the COVID-19 pandemic continues to rage, many businesses are struggling to cope financially – but small businesses (those with a rateable value of less than £51,000 per year) are deemed to have been the worst hit.
In his Budget speech, the new Chancellor of the Exchequer, Rishi Sunak, announced a raft of emergency measures to mitigate COVID-19’s impact on the economy, including the abolition of business rates for small retail, leisure and hospitality businesses this year (a tax break worth £1bn). No further business rate reform was announced, although Mr Sunak said that a fundamental review of business rates was to take place in the coming months, with results to be presented in the autumn.
The Chancellor also announced a £10,000 cash grant for small businesses eligible for small business rates relief.
Intu Properties, which owns Lakeside in Essex and the Trafford Centre in Manchester, among many others, has issued a warning that it may go under if it is unable to raise the funds to keep afloat. As the UK’s retail sector continues to suffer, Intu proved to be no exception and posted losses of £2bn in 2019.
With more retailers going into administration and closing stores, the value of Intu’s property portfolio dropped by 22% to £6.6bn and the firm racked up huge debts of £4.5bn.
The firm said that ‘extreme market conditions‘ were making investors unwilling to inject cash into the business. In this, Intu is not alone. Investment in the retail sector plummeted by 80% year-on-year in the first half of 2019, with prohibitively high rents leaving many businesses fearing they will have no option but to vacate their premises when their lease comes up for renewal.
Prior to the outbreak, the outlook for the London property market was promising, following the Conservatives’ election win in December and renewed certainty on Brexit.
Unfortunately, COVID-19, which appears to have hit London particularly hard, has called a halt to the upward trend, according to USB Asset Management. Travel restrictions are set to result in a drop in overseas investment, while previously interested investors and developers are more likely to hold fire to see how the situation develops.
|In his Budget speech, the new Chancellor of the Exchequer, Rishi Sunak, announced a raft of emergency measures to mitigate COVID-19’s impact on the economy…|
|HOUSE PRICE INDEX (JAN 2020)*||121.3*|
|Average House Price||£231,185|
*(Jan 2015 = 100)
|Region||Monthly Change (%)||Annual Change (%)||Average Price (£)|
(Quarter 4 – 2019)
|East of England||-2.2||-0.6||£286,999|
|West Midlands Region||0.4||2.6||£200,628|
|Yorkshire & The Humber||-0.9||3.1||£165,383|
|Source: The Land Registry
Release date: 25/03/2020 Next date release: 22/04/2020
|PROPERTY TYPE||ANNUAL INCREASE|
|FLAT / MAISONETTE
Source: The Land Registry
Release date: 25/03/2020
|Contains HM Land Registry data © Crown copyright and database right 2017. This data is licensed under the Open Government Licence v3.0.|
Source: FCA & Bank of England
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