Shops and landlords pay almost £1bn in rates despite holiday

Retail business rates high street

Embattled retail landlords and shops have handed over almost £1bn to English councils in business rates since the onset of the pandemic – despite the current rates holiday, according to new figures.

The Government launched a business rates break at the start of the pandemic which wrote off the property tax bills of retail, leisure and hospitality sites for the 2020/21 financial year.

However, the holiday did not cover properties which were vacant, leaving some landlords with bills still to pay.

Real estate adviser Altus Group said the exclusion of empty sites from the financial relief has left retail property owners with £924m in tax liabilities to pay for the current financial year.

Empty rates are a penalty to try and bring properties back into use quickly, with landlords only exempt from business rates on empty buildings for just three months.

After this time, most landlords must pay full business rates although some properties can get extended empty property relief like industrial premises.

However, retail property vacancies have steadily increased since the start of the pandemic, with 13.7% of all retail properties sitting empty at the end of December, according to the British Retail Consortium (BRC).

Robert Hayton, UK president of property tax at Altus Group, said: “The acceleration of the structural changes taking place across our high streets and these seismic changes to the fabric of the retail sector mean that empty rates are ripe for modernisation as part of the Treasury’s ‘fundamental review’.

Rate free periods need to be extended to reflect the time that it actually takes to re-let vacant properties.

“Failure to do so will stifle investment in our communities.”

The news comes after the collapse of the Debenhams and Arcadia brands, which are expected to see all 562 of their combined stores across the UK become vacant.

Altus said this could result in empty rates of £50m for Debenhams and £91m for Arcadia Group if new tenants cannot be found with three months.

The Centre for Retail Research said around 358 retail stores will close each week during 2021, forecasting that a further 18,620 will close this year – an expected increase of 18.2% on the 2020 calendar year.