Councils to seize empty high street shops to put them back to use.

I don't see why councils shouldn't be able to utilize empty premises for the good of the community.

The fact that it's not their premises? You don't think that should matter at all?

So if you went away for a week, came 'home' and found it had been repurposed and there was a bill waiting for you, you'd be cool with it?

Absolutely awful idea. It completely fails to combat the reason that shops lie empty. For a start it is state sponsored property seizure which I completely oppose as it undermines what it means to own a freehold. I'm not a fan of the current system of compulsory purchase orders either.

However the real reason that high streets are suffering is due to the high business rates charges which are typically about 50% of rental value on the open market, not rent paid. It is known as rateable value (RV) which is typically assessed every 5 years. As you can imagine rent can fluctuate a lot in that time due to market conditions but rates will remain incredibly high regardless. So if you were assessed in a particularly good point for the market your RV will remain high regardless of actual trading conditions.

So post pandemic high street occupiers will be paying 2017 rates valuations even though the market has been completely ****ed and the next revaluation has been postponed to 2023.

Furthermore shops have a far higher RV per m² than say a warehouse as they are more desirable. This puts traditional shops at a huge disadvantage to online retail which does not require a physical shop front.

The current business rates system is what is killing the high street not reluctant landlords. Landlords what tenants because otherwise their property is a cost rather than income. But tenants aren't willing to take the burden of rates which can see them making no profit at all. While there are exemptions, breaks and payment holidays the fundamental problem is that the system is flawed.

In order to revitalise the high street business rates needs to be completely reformed and a new fairer system put in place that encourages physical shops not punishes them.

I think the difference there is that my home is owned by me, an individual, presumably for my residence.

Most high-street shops are owned by property investment companies, oversees investors, international banks, real estate investment trusts etc. etc. Not individuals. I personally see quite a large moral distinction between taking action against an individual and a business/consortium of the very wealthy.

In this case, the value of commercial property is strongly linked to how much you can rent it for and how much other comparable properties in the same area are rented for. Lowering the rents is effectively lowering the value of your asset, so you get many firms that are willing to sit on empty property for a few years, waiting for the rent they want, to keep up the value of their asset rather than lower the rent and accept what the potential new business can afford/are offering.

I don't have any moral objection to governments intervening in markets when its for the benefit of the consumer, and in this case as far as I can see the intervention will be to the detriment of the property owners (the rich) and to the benefit of the high-street users (the poorer)

Saying to the landlords, adjust your rent to a level where business owners can actually afford to take on your property, or we will take action - is a good thing for me.

Tbh I feel it's too easy just to dismiss people and groups as rich so it's ok to take their things. No matter how big or powerful a group gets it's still individuals. Who decides where these lines are? Is the person with £999,999 allowed to take from the person with £1 million? Is the person with nothing allowed to take from anyone?

I get that the current system isn't working, and i'm all for pressuring landlords, but i'm against blasé appropriation of things that don't belong to you. If someone has bought a building I believe that within reason they should be able to do what they want with it, and that includes nothing.

I think the difference there is that my home is owned by me, an individual, presumably for my residence.

Most high-street shops are owned by property investment companies, oversees investors, international banks, real estate investment trusts etc. etc. Not individuals. I personally see quite a large moral distinction between taking action against an individual and a business/consortium of the very wealthy.

In this case, the value of commercial property is strongly linked to how much you can rent it for and how much other comparable properties in the same area are rented for. Lowering the rents is effectively lowering the value of your asset, so you get many firms that are willing to sit on empty property for a few years, waiting for the rent they want, to keep up the value of their asset rather than lower the rent and accept what the potential new business can afford/are offering.

I don't have any moral objection to governments intervening in markets when its for the benefit of the consumer, and in this case as far as I can see the intervention will be to the detriment of the property owners (the rich) and to the benefit of the high-street users (the poorer)

Saying to the landlords, adjust your rent to a level where business owners can actually afford to take on your property, or we will take action - is a good thing for me.

I get where your coming from, and I can see that its very logical. I think in this case its just a fundamental ideological difference that separates us. Your either OK with the state intervening in private property/affairs or your not, building from each side you'll get a very different outlook, but the core difference is just one of ideology.

I think there is probably a politically acceptable middle ground that would make both sides happy in some manner of market intervention/regulation that attempted to shift the Ballance towards making it less profitable for landlords to sit on empty properties upposed to taking lower rents, instead of just outright taking over properties (which while I personally have less of a problem with, clearly a lot of people will). E.g. increasing the costs of maintaining an empty property further to make it less profitable than renting them.

I'm really not sure where you have got this idea from that landlords want to sit on empty properties. That is not the reality of property ownership whether that be commercial or residential. Landlords are liable for all costs when the property is empty, insurance, maintenance, utilities, rates, etc.

It isn't profitable to have an empty property because it generates no income therefore no profit.

Private individuals own just 7.5% of high-street properties. Going up to around 13% if you include all types of owner occupiers. The rest are generally big businesses, the government, churches, investment firms local and domestic, etc.


The argument that is used to explain why landlords keep properties empty, goes like this:

Landlords have a choice when faced with an empty premise, they can either lower the rent to a sufficient degree, subsequently lowering the value of their property and portfolio, which in the case of many big investors will be multiple properties in the same area.

Or they can absorb the cost of keeping the business empty for a year or two, while waiting for a client who will pay the higher rate.

Commercial leases are generally for a lot longer than private leases, 15, 20 years etc. Its very much in the interest of many landlords to pay the costs of keeping it empty for a short while, if they get much bigger long-term return of securing a long-term contract at the level of rent they want, and through that keeping the value of the property at the level it is at.

Hence it makes perfect business sense in the current market to not panic when a shop is empty and adjust the rates down, but to wait and hold out, at least for a while, to secure the deal they want. Only if its absolutely not possible to find someone who will pay their rents, will they consider lowering it.

That's all fine from a landlord perspective. 2 years is nothing compared to the long lease before and after, and keeping the value high. But for the community, an empty shop for 2 years feels much more significant.

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An interesting side to this, is that when they studied closed properties in London, they found that closures were not linked to economic depravity as we would expect. There was little to no correlation between economic depravity and closures - which to me supports the idea that its not a simple rent supply/demand issue. The same london paper concluded that there was no shortage of businesses looking for premises, but just a clear mismatch between the type of situation that would work for business owners and for landlords.

In all the portfolios I have managed never have the landlords said let's hold onto to an empty property.

Retail leases are on average about 6 years so holding onto a property for 2 years doesn't make any sense financially.

London is not representative of the rest of the country, they have a property bubble.