Offices are hugely important, but the current ratio of commercial/economic gain to occupational costs is now unfavourable writes Robert Hayton  | Altus Property Services

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Offices are hugely important, but the current ratio of commercial/economic gain to occupational costs is now unfavourable writes Robert Hayton 

As Head of UK business rates, I manage Surveyors based at 9 regional office locations. Our Surveyors advise over 55,000 clients, occupying over 75,000 properties, on property tax issues.  So I have, I think, a reasonable insight into how Covid-19 is affecting the way we work and how we use commercial property.

Reacting to the effects of the obviously necessary Government restrictions intended to reduce the spread of coronavirus, Altus Group has raised over 33,000 Checks with the Valuation Office Agency seeking reduced business rates liabilities.

These appeals, citing Covid-19 as a material change in circumstances, will reduce Rateable Values by reflecting the reduced hypothetical rental value of our clients’ offices, shops, factories, warehouses.  Almost every property type has been negatively impacted to some degree.

As a part of this exercise we have seen, first-hand, the damage that restricting the movement of people causes.  Trade or demand has fallen, or completely dried up, for many retail, hospitality and leisure businesses with an inevitable domino effect to suppliers and manufacturers serving those sectors.

Government has granted a business rates holiday to retailers and those occupying hospitality and leisure properties, but there is nothing currently on offer beyond this for other sectors – so it falls to business to make their own case for relief from ongoing liabilities through claims like the 33,000 we have underway for our clients.

At Altus Group, for example, like many other businesses, we have invested in technology and equipment, are looking to more flexible working and continue to recruite to enable us to offer the same level of service and support to our clients.

Listening to our clients across all sectors it is clear that, after retail, hospitality and leisure, it is offices which have been hardest hit.  Whilst most office occupiers have adapted to make the best of a difficult situation, the ratio of commercial or economic gain to pre-pandemic occupational costs such as rent, service charge and rates is now very unfavourable.

This leads to three important conclusions. Firstly, Government must do whatever it can to maintain the safe return to normal commercial conditions; getting people back to work, getting them earning and boosting spending confidence in support of the economy.

Second, offices, in particular, are hugely important. Yes, it is possible to work from home: technology can support virtual connection and remote team working. And, yes, people adapt and do so quickly.  But people are at their commercial best and most effective, it seems, when they are able to interact in person.

And finally, the material change appeals are now particularly time sensitive for those properties like offices given ongoing occupational costs. Their settlement must be expedited.

Robert Hayton is Head of UK business rates at the real estate adviser Altus Group

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