Could local authorities take a ‘rates equity stake’ in retailers?
13 August 2019
CEOs of more than 50 high street retailers have today written to the Chancellor calling for reform on the ‘broken business rates system’. Business rates have, they say, increased by over 50% since the 1990s and are in part responsible for the collapse of some high street brands.
Collyer Bristow, whose clients include many retailers and retail landlords, believes part of the answer is for local authorities to take a ‘rates equity stake’ in retailers.
Jeff Roberts, Partner and Head of Commercial Services at Collyer Bristow explains:
“Landlords have long used turnover rent agreements and we are now beginning to see them going further, taking equity stakes in their retail tenants. This provides retailers with some relief from high rents, with landlords sharing directly in the success of individual stores. We are also seeing local authorities invest in retail and office real estate in part to shore up local high streets.
“Is it now time to complete a virtuous circle with local authorities taking a rates equity stake in retail occupiers, supporting struggling high streets and together with landlords creating a partnership for sharing success. A low base rate with an uplift based on store sales – following the model of turnover rents – would help struggling retailers and provide a steady cash flow for local authorities with rates paid quarterly.
“We recognise that such an approach would not be easy. Retailers have multiple sites and multiple landlords, sales are a mix of both off and online, with online sales often returned instore. But the sector is innovative and so too are local authorities. It is not outside of the realms of possibility for such a model to evolve on a store by store basis.
“We recognise that local authorities do need to raise maximum revenues at a time of constrained budgets, but they also have an important role in supporting high streets. It is clear the current model is not fit for today’s retailing world and reform needs to be approached from all sides.”
Jeff Roberts is available for interview. He can be reached on 020 7242 7763 or by email: email@example.com.