Business rates represent one of the largest costs for businesses occupying commercial properties, many of whom have undoubtedly been acutely affected by the COVID-19 pandemic. With that in mind, the Government announced in its Spending Review that it had decided to freeze the business rates multipliers in 2021/2022, with the intention of benefitting and providing continued support to those businesses in the retail, hospitality and leisure sectors.
Chancellor Rishi Sunak extended this until March 2022 in his Budget announcement on 3rd March 2021, but what does this mean for commercial property owners?
Business Rates Relief Extended
It was widely predicted that the end to financial support schemes would create a so-called “cliff-edge” at a time when businesses required financial support the most. To avoid this, the Chancellor announced in the Budget that the Government will provide occupiers of commercial properties in the retail, hospitality and leisure sectors with 100% business rates relief from 1st April 2021 until 30th June 2021. This relief will then reduce and from 1st July 2021 to 31st March 2022 there will be 66% business rates relief, capped at £2 million per business for properties that were required to close for the third lockdown in England on 5th January 2021, or £105,000 per business permitted to be open on that date.
How Does This Affect the Commercial Property Market?
The 100% business rates relief extension will be welcome news for those in the retail, leisure and hospitality sectors who occupy or may be looking to purchase commercial property, as it means one less financial burden in the short-term and a reduced financial burden from July 2021 to March 2022. In turn, this may also be welcome news for those who, whilst not directly benefitting from the business rates relief themselves, will rely on conducting business now and in the future with those businesses in the relevant sectors and their continued operation.
The Government has confirmed that it will review the business rates system as a whole and the results of their findings will be published in Autumn 2021.