Our monthly property market review is intended to provide background to recent developments in property markets, as well as to give an indication of how some key issues could impact in the future.
2020 Budget prioritises relief for struggling businesses
As the COVID-19 pandemic continues to rage, many businesses are struggling to cope financially – but small businesses (those with a rateable value of less than £51,000 per year) are deemed to have been the worst hit.
In his Budget speech, the new Chancellor of the Exchequer, Rishi Sunak, announced a raft of emergency measures to mitigate COVID-19’s impact on the economy, including the abolition of business rates for small retail, leisure and hospitality businesses this year (a tax break worth £1bn). No further business rate reform was announced, although Mr Sunak said that a fundamental review of business rates was to take place in the coming months, with results to be presented in the autumn.
The Chancellor also announced a £10,000 cash grant for small businesses eligible for small business rates relief.
Shopping centre giant could go bust after huge losses
Intu Properties, which owns Lakeside in Essex and the Trafford Centre in Manchester, among many others, has issued a warning that it may go under if it is unable to raise the funds to keep afloat. As the UK’s retail sector continues to suffer, Intu proved to be no exception and posted losses of £2bn in 2019.
With more retailers going into administration and closing stores, the value of Intu’s property portfolio dropped by 22% to £6.6bn and the firm racked up huge debts of £4.5bn.
The firm said that ‘extreme market conditions’ were making investors unwilling to inject cash into the business. In this, Intu is not alone. Investment in the retail sector plummeted by 80% year-on-year in the first half of 2019, with prohibitively high rents leaving many businesses fearing they will have no option but to vacate their premises when their lease comes up for renewal.
London property boost cut short by COVID-19 outbreak
Prior to the outbreak, the outlook for the London property market was promising, following the Conservatives’ election win in December and renewed certainty on Brexit.
Unfortunately, the COVID-19, which appears to have hit London particularly hard, has called a halt to the upward trend, according to USB Asset Management. Travel restrictions are set to result in a drop in overseas investment, while previously interested investors and developers are more likely to hold fire to see how the situation develops.
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