Walk down any high street and you will see empty shops. The British Retail Consortium reported in July 2021 that nationally one in seven shops was empty (14.5%) and that there had been over three years of increasing vacancy rates. Regionally there are variations, with reports in the Eastern Daily Press from 2019 showing rates close to 19% in Great Yarmouth.
Travel out of town and we also see listed buildings and factories sitting idle, covered in security mesh, or left to rot with the damage of arson or failed redevelopment scarring their sides.
Covid-19 has cast a long shadow over the United Kingdom and yet these issues existed long before the events of the last two years.
Why is this?
We are, after all, constantly being reminded or shown that offices are being converted to residential accommodation, that these new properties are being marketed to help those that have low incomes or are unable to find a way onto the housing ladder in a more traditional way. So, if there is a solution to the issue, then why are some properties, some landmarks, left to rot?
As ever reality is far more complex and the solution more limited than is often reported.
Take a moment and consider yourself to be the owner of two commercial units. You have recently acquired them at auction. One is a small unit with a rated value of less than £2,900 and takes the form of a garage at the rear of some shops whilst your other unit is a large, old, listed building, a hotel for example, on the outside of town. Neither have tenants and have been left in poor repair.
What do you do with them?
On the one hand, converting the hotel and the garage into housing could, in principle, be a financially astute move, bringing in much needed revenue and possibly even aiding a landlord to earn a small income from the rent. On the other hand, you would lose the opportunity to offer a growing business the opportunity to expand, to move from being based at home, to a small premises, or to move to be an enterprise of grander scale.
Here is the catch. You can be entrepreneurial and turn them into housing or you can support entrepreneurship and give opportunities to businesses to thrive, but unless you borrowed a lot of money to purchase them, you are not actually spending any money out, other than insurance.
That is right, in the real-life game of Monopoly that is played out across the country, from small village to thriving metropolis, the only pressure on the owner to do anything comes from the banks and funders in terms of the service of the loans.
A simple search of the Valuation Office Agency website shows that both of the properties described above are exempt from commercial rates as long as they remain empty. Other relief is available in the short term but once it expired it adds to the burden on an emerging business.
Empty shops are still rateable
Now, not every empty shop fits into the ‘remain empty’ rate exemption category, in fact there are any number of reasons for an investor to not be able to find an occupier for the shop, be it the location, the demographic or possibly even the antiquated nature of the local facilities, such as parking and pedestrian access, as well as Covid and this is before we even consider other activities, such as money laundering. It is not all the fault of Business Rates.
Yet despite any public protest against that may occur against the dilapidation of a beloved landmark or the impact of the eyesore, there is not a lot a Local Authority can do. In terms of taking it off of your hands, Local Authorities cannot use Empty Dwelling Management Orders which is in effect compulsory leasing, on commercial units as the legislation is specifically targeted to domestic dwellings. Compulsory Purchases take time and must be acquire the property at a realistic market rate, so you as the owner will be reimbursed. Some local authorities do try and ensure that the property does not cause any harm or disrupt the amenity of the neighbourhood, but these powers are limited (Building Act 1984 or Town and Country Planning Act 1990).
Welcome to the reality: some companies purchase commercial units with the intention of flipping them to residential use and then either they run out of money or get bogged down with planning. They then either sell up to someone new or go into insolvency. New owners then come in regardless and have no incentive to put the unit back into use, as the costs could easily out way the profit unless they have the funds to proceed, or hope to convince the local authority to allow more profitable development or less affordable housing on the site.
There is not a lot that we, the public, can do about it. Except campaign for a change in the law.