The Welsh Assembly is set to gain the power to manage business rates from 2018. This means that those looking to sign a new lease agreement now which runs beyond this date may be able to use the prospect of any new legislation as a bargaining chip in their negotiations with the landlord.
Mike Rees, partner at the Cardiff office of Bruton Knowles is now advising both tenants and property owners to get in touch in order to discuss what options could be open to them until details of any change in business rates are fully known.
Mike said: “Some businesses will be looking to sign new agreements taking them forward to 2018 and beyond. Although this date might seem a long way off, it’s surprising how quickly it will come round.
“With just under four years to go, many businesses with leases that are up for renewal might hold back until they know what the implications are.
“At the moment, without any guidance from the Welsh Government on what it is likely to do regarding business rates, tenants and landlords alike are left in a state of limbo, especially those who are looking to renew soon.
“If rates become more attractive, more businesses could be looking to relocate to Wales which will mean higher demand for office and industrial space. Conversely, if rates are less favourable we could see businesses leave the Principality resulting in a period of voids.
“A number of businesses have already expressed concern about the lack of detail on what the plan is for business rates. The sooner this is known, the better for Welsh business.”
Currently the Welsh Government gets its money in a settlement from the UK government and cannot raise its own taxes or borrow money.
But after recommendations from the Silk Commission inquiry last November, more powers will be devolved to Wales.
The plan is that a revenue body will oversee the new powers and ensure taxes are collected.
Mike added: “We’ve already had some clients contact us, both landlords and tenants, to discuss the implications of the tax raising powers of the Welsh Assembly. Although awareness is relatively low, this will rise over the next year as the potential impact of any new legislation is recognised.
“Taking appropriate professional advice at an early stage would be advisable.”