Commercial property occupiers in Peterborough are poised to benefit from business rates exemption but the pressure on supply of stock could see rents rise.

Business Rates: Peterborough businesses benefit from rates relief

 

A recent briefing, by the Centre for Cities, on the impact of the new business rates regime saw Peterborough ranked in the top ten cities for commercial properties and business premises that will benefit from small business rates relief.

The new business rates schedule came into effect on 01 April this year but the revaluation values are based on those of April 2015. Although acknowledged as a growth city and set in a prosperous region of the country, industrial property values in Peterborough are relatively low compared with other UK towns and cities.

This has helped Peterborough in the rating revaluation of its commercial properties as it sees many benefiting from the increase in the small business rates threshold announced by the Chancellor of the Exchequer in his spring budget statement.

In the financial year just ended – 2016/2017 – 33 per cent of Peterborough properties were exempt from business rates but, under the new business rates regime and the increased threshold assistance, exemption will extend to 57 per cent of properties for the financial year 2017/2018.

This is good news for occupiers, in the short term at least. For example, where a tenant occupies one unit in Peterborough with a rateable value of £12,000 there was a business rate charged of around £5,850 per annum up until 31 March 2017; from 01 April there will be no charge under the new arrangements. Considering the rent on the unit might be £11,000 pa, the £5,850 is a significant saving on fixed costs for the business.

However, this silver lining has a cloud looming on the near horizon. For the two years since April 2015, the supply of industrial units in Peterborough in general and, in particular, smaller units in this slice of the market with a rateable value under £12,000 has been diminishing. Indeed, for industrial units under 2,000 sq ft, availability has reduced from 40 units to now only five at the time of writing.

Increased pressure on rents and prices created by the lack of available stock will only intensify as incumbent occupiers start saving on their business rates. As new tenants and occupiers start competing for the few remaining available units in the marketplace, it is highly likely they might be willing to spend some of their new business rates saving on higher rent levels.

It will be interesting to watch how these forces in play out in the coming twelve months but it is not unreasonable to assume that Peterborough might experience some fairly steep rises in prices sooner rather than later, particularly for premises in the industrial property sector.

For more information about business rates and appeals contact Martin Hughes, 01733 556490 , [email protected]  or see https://www.bsm.uk.com/our-services/rating-compulsory-purchase-&-compensation/

Taking a lease on a commercial property, on full repairing terms, without proper advice on the potential implications, can be an expensive experience for those new to business leases. David Park, head of Barker Storey Matthews’ now part of Eddisons Building Surveying department explains more.

Commercial Property – Schedules of Condition

 

Short term leases of 3-5 years are now common, and it is important that any prospective tenant ensures that the obligations they take on are proportionate to the length of the lease. For example, entering a full repairing lease for five years where the roof is in relatively poor condition could result in the tenant being responsible for replacing this if the condition deteriorates to a point where it is beyond economic repair before or at lease expiry.

It is important, therefore, that the repairing and other obligations within the lease are properly considered and, where relevant, defensive measures put in place to protect the tenant’s interests.

Of course, depending on the other terms of the lease, this may be rejected by landlords, especially where rents have been reduced and/or incentives are given in the first place. So tenants also need to be mindful that cheap rents may reflect the increased costs of repair.

A common way of achieving protection is to have a schedule of condition prepared to record the condition of the premises at lease commencement. Typically, this schedule would include photographs and text to ensure that there is an accurate record of the condition at lease commencement. The content of the document is normally agreed between the landlord and tenant, and a copy of this, signed by both parties, is appended to the lease.

It is important that the document is properly prepared, particularly as the relative cost of professional advice is generally insignificant when compared to the potential cost of a substantial dilapidations claim at lease expiry.

We have seen many examples of poorly prepared schedules of condition and these have led to uncertainty, disagreement and unexpected costs at lease expiry. Examples of the problems encountered include:

• Poor quality photographs which do not clearly show the defects that exist
• An insufficient number of photographs, mainly consisting of general views without close-ups of individual defects
• Original digital photographs not being available, with reliance on colour copies of original prints
• Schedule of condition misplaced or lost

We have even had one or two instances where a lease has referred to a schedule of condition, only to find that the Schedule of Condition was never prepared! It is critical, therefore, that the document is properly prepared, the photographs are of good quality, a digital copy of the photographs is available, and that supporting text is provided, cross-referenced to the photographs.

The cost of hiring a mobile platform will add £400-£500 to the overall cost and may seem an unnecessary expense, but this could be a false economy when the potential cost of roof repairs or replacement is taken into account.

While schedules of condition are a useful means of protecting a tenant’s position, they do not remove the obligation to repair and do not necessarily provide the level of protection some tenants expect.

For example, if the schedule records that there is minor wet rot to a door and no attempt is made to maintain the door to prevent further deterioration, such that by lease expiry the door is beyond economic repair and will need to be replaced, it would be the tenant’s responsibility to do this, notwithstanding that this includes an element of improvement.

In most cases, it is just the repairing covenant that is qualified by the schedule of condition, and there is still an obligation to redecorate prior to lease expiry. This matter should be considered and properly addressed when agreeing lease terms, as this can prove costly. Often, the exposed steel frame in industrial buildings remains undecorated for many years, and the cost of redecorating could be significant.

Commercial Property Peterborough – Schedule Ready

We have recently prepared a schedule for a commercial property in Peterborough, an industrial building of just over 100,000 sq.ft., where the decorating covenant was not qualified and the steelwork had not been redecorated for some considerable time. We inspected prior to lease terms being agreed and were, therefore, able to ensure that there was no obligation to redecorate the steel frame at lease expiry.

How can we help?

Obtaining professional advice at an early stage in lease negotiations will give prospective tenants the best opportunity of protecting their position and limiting their potential dilapidations liability at lease expiry. Please contact David Park or Ian Beesley on 01733 233445 should you require assistance.

This week, Cameron Park, based in the Barker Storey Matthews now part of Eddisons Peterborough office, discusses the challenges faced by businesses that are looking to acquire new commercial property.

Barker Storey Matthews now part of Eddisons, Peterborough: The Challenges Faced by Smaller Companies When Acquiring Commercial Property

 

The BBC has recently reported that smaller companies here in the UK are not receiving the funding required to grow to a global size.

Funding has, for some time, been an issue within the UK as many investors look to dispose of their share of a business well before it can grow to the size of a Google or an Uber.

It has been suggested that one of the main reasons for this is that tax breaks available to investors are only a benefit if the investor exits when the company is smaller. Investors are essentially incentivised to exit from an investment earlier than they would do if they were based elsewhere around the globe.

This highlighted to me one of the many challenges that small businesses face in modern times. Acquiring commercial property is another example of these challenges and can be a stressful process throughout. This is especially true in a buoyant market where availability is low and prices and rents are rising.

Inexperience

Many occupiers rely solely on themselves or one of their colleagues/employees to acquire commercial property on behalf of the company. This usually involves someone who has limited experience in identifying the type of property that is required – which can result in a number of issues being missed.

If the wrong type of property is sought then the company could not only acquire a property that does not suit their requirements but they could also be faced with a liability they are unable to dispose of, especially if they pay too much or commit to unattractive lease terms.

Seek Advice

The solution is to take advice from a commercial property professional / chartered surveyors , ideally before the search for a new premises starts. They will be able to advise on the nature of the property that will be most suitable for the business as well as lease terms which reflect a company’s specific operational requirements.

As an example, if the company is growing, flexibility needs to be built into the lease agreement to account for expanding operations and needs.

Other pitfalls associated with occupying commercial property could be missed if advice is not taken on such things as lease break clauses, rent free periods or other inducements, schedules of condition to avoid substantial dilapidations, liabilities at lease expiry, etc. Good advice is never expensive, and the rewards of speaking with a professional prior to this process will far outweigh the expense incurred should your acquisition of property go wrong.

For further advice regarding the acquisition of commercial property, please contact one of the agency teams at any of our four offices (Peterborough, Huntingdon, Cambridge and Bury St. Edmunds).

We are able to advise on all property matters across these locations and the surrounding areas. Alternatively, give us a call here at BSM Peterborough on 01733 897722.

 

Warehouses for Sale or to Let in the UK

Barker Storey Matthews now part of Eddisons have the expertise and local knowledge to help you find the perfect location for your commercial property letting or purchase. Our expert team have worked with a variety of different businesses including major corporate organisations and local authorities and are best placed to identify suitable areas and optimal facilities for your commercial property whether looking for large warehouses with additional forecourt space or smaller warehouses with three-phase power supply.

Whether you are a small business which warehouses products in the basement, or a large company looking to invest a long-term storage solution, our selection of available warehouses for sale or to let can provide you with the space you need to grow and develop your business. We have a range of warehouses for sale or to let, prominently in the East – making it easier for you to choose the right storage space for your business.

Finding the right location for your business is of key importance when deciding on a warehouse for your company. Warehouses that are well-placed, close to strategic junctions, and with good connectivity, facilitate the movement of goods. We are one of the biggest independent commercial property firms in the East, with offices based in Cambridge, Huntingdon, Peterborough and Bury St. Edmunds.

Here at Baker Storey Matthews now part of Eddisons, our expert team has decades of experience and have been recognised for our award-winning services helping to find solutions for each of our clients. With the knowledge to guide and advise you at every stage of the process in choosing one of our warehouses on sale for your business. Whatever your goal or needs, we can assist you in finding the perfect space, land or opportunity for your next commercial property venture.

 

Got an Industrial Requirement – How can we help?

 

Are you looking for Industrial property or warehouse space? Are you unsure on what you need?

At Barker Storey Matthews now part of Eddisons we have undoubted experience in dealing a wide variety of commercial property and may be able to assist you at the start of your search by identifying a number of points you need to consider before setting out to view potentially suitable properties. Not only will this help in identifying the right space for you but will reduce the search time you may have to spend in relocation. So, ignoring the actual size of the space – as we assume you pretty much know this – a few pointers to get you started:

(a) Height – what is the minimum working height you need – think about the fact that some industrial units will have a flat roof. Also think about steel frame construction so height to the underside of the frame. Height is more appropriate when considering warehouse units.

(b) How many loading doors do you need – again perhaps more critical for warehouse property – and height of the doors – do you need articulated lorries to back in?

(c) What sort of/number of lorry movements do you have and the size of lorries that you use or are to visit?

(d) What office space do you need? / How many office staff are employed?

(e) How many car parking spaces are required? – something more critical when looking at office property!

(f) Do you have a specific power requirement? If it is excessive you need to think about power availability in the area.

(g) Do you need a dedicated yard area – this often reduces the number of suitable properties as detached units are in shorter supply.

Help us to help you. Identify your requirements in detail from the outset and your relocation should be easier to implement.