UK - Commercial Property News May 2020 Compiled by Hayven Property Tax

Commercial property is always a very newsworthy topic. Here is a roundup of the latest news (May 2020) concerning commercial property and investments in the UK. At the time of writing, the UK is still mainly in “lockdown” with some restrictions being relaxed, so it is hardly surprising that the virus dominates the news including how COVID-19 Coronavirus is impacting property and rents.

Change ‘permitted use’ rules to help real estate survive, surveyors urge the Government

Surveyors’ professional body RICS has called on the government to relax the rules around commercial property use as real estate asset values tumble amid the ‘seismic’ impact of Covid-19 reports Investment Trust Insiders.

Commercial property has endured the headwinds of Brexit and the decline of the UK high street that has seen retail property values plummet and landlords forced to lower rents as retailers enter into company voluntary arrangements (CVAs).

After a brief rally at the beginning of the year, property then fell victim to the coronavirus as government restrictions shut down businesses and with it tenants ability to pay rent.

A RICS survey of its members showed demand has slumped over the past quarter, with a net, negative balance of -24%. Retail has been hardest hit, with a 67% slump in demand, office demand is tumbled 16%, though a shortage of industrial properties saw demand for them climb 6%.

However, demand has plunged since the government imposed social distancing restrictions last month to combat the pandemic.

Since 1 April, RICS says retail property demand has plummeted 82%, office demand tumbled 44%, and even buoyant industrials slid 7%, pushing up availability and landlords inducements to take up space.

Given the drop in demand, 29% of surveyors expecting commercial rents to fall, although there is a marked difference by sector, as 69% forecast retail rents will decline compared to 24% believing offices will become cheaper. Industrial rents are expected to remain flat in the near term.

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The tough backdrop for property has prompted RICS to call on the government to support the commercial property sector by relaxing the rules around permitted uses for property. All commercial buildings have a ‘permitted use’ ascribed to them that requires planning permission from local councils to change.

Simon Rubinsohn, the chief economist at RICS, said the ‘seismic nature’ of Covid-19 and its impact on commercial property should not be underestimated as it will accelerate the shift to e-commerce and the decimation of the high street.

It will also lead to an ‘inevitable rise in agile working as businesses seek to build resilience against future pandemics’ and a ‘reassessment of demand for office space’.

Hayven Property Tax is an independent commercial property tax consulting company who are experts and specialise in capital allowance claims for commercial properties.

Based in Cardiff, Hayven Property Tax are able to service clients across the United Kingdom.

Find out more here: www.hayvenpropertytax.co.uk/commercial-property-news-may-2020/