Business rates are a growing burden on businesses as compared to the rent charged by UK landlords, according to a report released today by the Property Industry Alliance.
The Property Data Report 2015 has revealed that rental values, on the whole, have increased at a much slower rate than other business costs over the last 10 years, rising much more slowly than business rates and the rate of retail price inflation (3.1%).
Since 2000, the value of the UK’s commercial property stock has grown at an annualised rate of 3.2%, slightly ahead of inflation. All other parts of the built environment have grown at a faster rate than commercial property. In particular, the value of the stock of residential property has grown much more quickly, at 6.2% per annum, reflecting greater increases in both values and the stock of housing. Notably, the number of flats and houses in the UK has grown annually at more than twice the rate of commercial floorspace.
The retail sector has seen the slowest growth of rental values at 0.2% per annum, compared to a 3.9% increase in business rate over the past decade.
Since 2000, the value of the UK’s commercial property stock has grown at an annualised rate of 3.2%, slightly ahead of inflation. All other parts of the built environment have grown at a faster rate than commercial property. In particular, the value of the stock of residential property has grown much more quickly, at 6.2% per annum, reflecting greater increases in both values and the stock of housing. Notably, the number of flats and houses in the UK has grown annually at more than twice the rate of commercial floorspace.
The retail sector has seen the slowest growth of rental values at 0.2% per annum, compared to a 3.9% increase in business rate over the past decade.
Rents in the office sector have seen an average increase of 1.8%, compared to a 3% business rates increase.
The renting of homes declined in the period leading up to the early 2000s but since then it has been growing, reflecting in particular a doubling in the proportion of those who are renting privately. Privately rented housing now accounts for 19% of the value of the UK’s housing stock, according to the IPF’s The Size and Structure of the UK Property Market End–2014 Update.
The renting of homes declined in the period leading up to the early 2000s but since then it has been growing, reflecting in particular a doubling in the proportion of those who are renting privately. Privately rented housing now accounts for 19% of the value of the UK’s housing stock, according to the IPF’s The Size and Structure of the UK Property Market End–2014 Update.
Commercial property investors are increasingly interested in residential property as an investable asset.
Other findings in the report include the fact that overseas investors now own a quarter of invested UK commercial property, worth £113bn. This makes them the largest owners of UK commercial property that is invested for the second year in a row, having increased their presence in the market by 129% over the past decade.
In comparison, UK institutions now own £85bn commercial investment property, representing just under a fifth of total investment. This is an 8% decline since 2004.
The report shows that the total value of UK commercial property rose to £787bn in 2014, a 15% increase from the previous year. In 2014 the industry directly contributed about £63bn to the economy, representing 3.9% of Gross Value Added. Occupiers of commercial property paid over £20bn in business rates in 2014.
The sector employs nearly a million people - about one in every 35 jobs – and contributes almost £15bn in direct taxes to the Exchequer.
Out of total UK commercial stock, the largest sector by value last year was retail, worth £340bn. This is followed by offices, worth £234bn, and industrial, worth £148bn. Other commercial property, including hotels and leisure, was valued at £65bn.
Sir Robert Finch, Chairman of the Property Industry Alliance, said: “Commercial property is an integral part of the UK’s economy contributing a comparable amount to the economy as the telecommunications and transport industries combined.
Other findings in the report include the fact that overseas investors now own a quarter of invested UK commercial property, worth £113bn. This makes them the largest owners of UK commercial property that is invested for the second year in a row, having increased their presence in the market by 129% over the past decade.
In comparison, UK institutions now own £85bn commercial investment property, representing just under a fifth of total investment. This is an 8% decline since 2004.
The report shows that the total value of UK commercial property rose to £787bn in 2014, a 15% increase from the previous year. In 2014 the industry directly contributed about £63bn to the economy, representing 3.9% of Gross Value Added. Occupiers of commercial property paid over £20bn in business rates in 2014.
The sector employs nearly a million people - about one in every 35 jobs – and contributes almost £15bn in direct taxes to the Exchequer.
Out of total UK commercial stock, the largest sector by value last year was retail, worth £340bn. This is followed by offices, worth £234bn, and industrial, worth £148bn. Other commercial property, including hotels and leisure, was valued at £65bn.
Sir Robert Finch, Chairman of the Property Industry Alliance, said: “Commercial property is an integral part of the UK’s economy contributing a comparable amount to the economy as the telecommunications and transport industries combined.
Commercial property provides the UK’s urban and commercial infrastructure and it is encouraging to see that the sector continues to grow and that it is attractive to both overseas and domestic investors.
“It is interesting to see that the value of business rates has significantly increased over the past decade, considerably outstripping the value of rental increases. This is particularly prevalent in the retail sector, where business rates have also grown by far more than the rise in sales turnover recorded in retail property.”
The Property Industry Alliance is formed of nine leading property bodies that tackle major property issues in a more coordinated way while retaining their separate identities and roles. Members include:
Association of Real Estate Funds (AREF);
British Council for Offices (BCO);
British Council of Shopping Centres (BCSC);
British Property Federation (BPF);
Commercial Real Estate Finance Council Europe (CREFC Europe);
Investment Property Forum (IPF);
Investment Association (IA);
Royal Institution of Chartered Surveyors (RICS)
Urban Land Institute (ULI).
The full Property Data Report 2015 can be found on here.
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“It is interesting to see that the value of business rates has significantly increased over the past decade, considerably outstripping the value of rental increases. This is particularly prevalent in the retail sector, where business rates have also grown by far more than the rise in sales turnover recorded in retail property.”
The Property Industry Alliance is formed of nine leading property bodies that tackle major property issues in a more coordinated way while retaining their separate identities and roles. Members include:
Association of Real Estate Funds (AREF);
British Council for Offices (BCO);
British Council of Shopping Centres (BCSC);
British Property Federation (BPF);
Commercial Real Estate Finance Council Europe (CREFC Europe);
Investment Property Forum (IPF);
Investment Association (IA);
Royal Institution of Chartered Surveyors (RICS)
Urban Land Institute (ULI).
The full Property Data Report 2015 can be found on here.
Further Reading
London leads the way with Build to Rent, delivering twice as much as rest of country
Historic Housing and Planning Bill will transform generation rent into generation buy >New Housing and Planning Bill has been introduced to Parliament by the government
Draw up plans to build more homes in two years... or we'll do it for you: PM's threat to reluctant town halls
Higher planning fees could shorten building / planning applications
The Reality > The lowest rung of the housing ladder? HMO's Rise & Phlegmatic approach by Landlords
Get rid of the cowboys and stabilise the lettings and housing market
Oxford landlord convicted for unlawful eviction of tenant
UK First-time Home buyers face prices almost 10% higher than year ago says Righmove.co.uk > Vicious circle as high tenant demand leads buy-to-let investors to go head-to-head with first-time buyers
Bank of England concerns over Property buy-to-let boom
Bonfire of a Vanity Project - The Worst Kept Secret in the UK Property Industry
emoov is really moving ! exclusive interview
Housesimple.com online estate agent Vs Traditional Jamie Lester interview with Gaby Logan Radio 5
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MPs and peers to consider energy efficiency of rented housing >The All Party
Parliamentary Group (APPG) for the Private Rented Sector (PRS)
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MPs and peers to consider energy efficiency of rented housing The All Party Parliamentary Group (APPG) for the Private Rented Sector (PRS)
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Marie's Question >Jeremy Corbyn The New Labour Leader takes his seat in the Houses of Parliament
MPs and peers to consider energy efficiency of rented housing The All Party Parliamentary Group (APPG) for the Private Rented Sector (PRS)
UK house prices increased by 5.2% in the year to August 2015, unchanged from 5.2% in the year to July 2015
August house purchase lending down 9% on July but up 2% on last year
Right To Buy Homes Urgent Parliament questions with Brandon Lewis UK housing Minster
Britain Inflation and housing: joined at the hip
Zac Goldsmith: housing crisis number one priority in London – videos
Councils must produce local plans for new homes in their area by 2017 – or the government will ensure, in consultation with local people, those plans are produced for them.
Government ministers and housing association leaders have negotiated a deal to extend the right-to-buy policy
Residential sales Move up despite lack of property Stock RICS October Report
TfL could help fix London’s housing Crisis as well as our trains
Draw up plans to build more homes in two years... or we'll do it for you: PM's threat to reluctant town halls
Barriers to house building: How serious are the challenges we face?
Conservatives Conference 2015 all you need to know
UK House Price Overview
Labour conference: Sadiq Khan"I'm going to make the election a referendum on London's housing crisis"
What Jeremy Corbyn's leadership victory may mean for housing policy in the UK
London housing – a crisis for businesses too A report for Fifty Thousand Homes
10 winning ideas announced by NLA ! for Housing to help solve the London housing shortage
Newly Elected Labour Candidate, for Mayor of London, Sadiq Khan, outlines his Housing Policies
Taylor Wimpey CEO Peter Redfern will lead Labour Housing Redfern Review
Building Markets for the Good of People > BoE Open Forum
Bank of England concerns over Property buy-to-let boom
Government ministers and housing association leaders have negotiated a deal to extend the right-to-buy policy
How low can you go ? speech by Andy Haldane BoE Chief Economist
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