The recent budget from the Government has caused many central London companies with offices in the capital to re-evaluate the cost of doing business there. All business rates are being reviewed across each region of England, but central London will fare worst due to extra factors.
Central London Will Suffer Most
On the whole these changes will mean most regions will pay less. However, for those in central London the rate hikes will mean that businesses will pay an average 10 per cent more, before rebates are taken into account.
Some offices and businesses will see a rate hike of up to 19%. It is estimated that in the South East ( outside London) rates will fall by five per cent.The government aim is to ensure rates are linked to recent property values.
Countrywide office rates on average will fall by seven per cent in the West Midlands and up to 10 per cent in the East Midlands.The UK budget rate increases will have a big impact on property costs for occupiers in the W1 / W2 London postcode in particular.
There are about 280,000 firms who pay business rates in central London. Recently their bills have risen by 5% due to inflation-linked changes. In real terms that meant an average £2,000 increase in rates.
Opportunity For Investors Outside London
With many businesses in central London now unable to absorb the new costs, this could mean an opportunity for those who own office space outside London. The potential for businesses to relocate looks very likely. It’s possible firms may relocate further north and out of London all together as many did in the ’90′s.
Investors owning property just outside central London could do well to market their office space to businesses there. A swift marketing plan now could see investors cashing in before the rush to move takes hold when businesses find themselves unable to absorb further costs.