Alex Livermore, Head of Digital – 19th November 2021
A bit over a month since the September Quarter Day due date, the collection of commercial property rents in the UK has reached the highest level seen since March 2020, according to the latest figures.
An average of 81.9 percent of rents owed by tenants were paid in full and collected within 21 days of the due date. This has no doubt increased confidence within the sector, as it shows signs of improving portfolio wide cashflows that has been restricted since the start of the COVID-19 pandemic.
More rents being collected on average is positive news, especially when compared to the June 2021 Quarter, when only 73.9 percent had been paid by tenants after 21 days.
The added confidence has no doubt pushed property investors to start looking at increasing rents that, for some, are long overdue. However, at HMA Tax, we have seen an influx of investors look to reinvest this capital back into their commercial property portfolio, making much needed improvements to increase yield and value.
Raising rents, be it through perceived or intrinsic value, and increasing a property’s value are factors that are encouraging the increased price point on commercial property leases across the UK, for all asset classes at their fastest pace since 2004.
Tom Meredith, Director of HMA Tax shares his insights on the topic:
These figures will be very much welcomed by investors, but there is still the question of how businesses are going to cover their rent payments during a pandemic. The total outstanding is just under 7 billion GBP, which accounts for about 5% of all money owed nationally. While it may not seem like much on paper – it is having an impact on the ability for property owners to reinvest within their commercial property assets, hence the latest string of tax incentives made available for commercial property owners.
The reductionist impact on commercial property and its associated economies was highlighted within the autumn budget, which is increasingly looking to motivate businesses to invest and purchase assets for use in the business, ranging from equipment and research costs to expenses for building renovations.
James Telling, Head of Developments & Acquisitions explains:
I think generally what we’re seeing is quite an upbeat tone in the South East and the London investment property market. With incentives such as the 130% super deduction on eligible capital expenditure, there has been no better time to reinvest in your commercial property to improve the value of your property for both yield and value perspective, whilst also claiming a massive share of these improvements as tax reliefs.
Embedded Capital Allowances claims remain one of the most under-utilised tax incentives for commercial property owners in the UK. These claims should always be considered when holding, upgrading, buying or selling commercial property.
Please note that this specific area of tax requires input from both tax specialists with a detailed knowledge of the legislation and expert surveyors to identify items applicable to your claim.
If you or your team Interested in finding out more about capital allowance claims, estimate your claim below or get in touch with HMA Tax on 01384 904090.