So here is a thing, the government says that it wants the people to provide for their own pensions in the future. So those who are in a position to do so have gone out of their way to start to do just that. Great says the government!
Of course what a lot of small businesses do is they buy a building and, in many cases, lease it back to their own company. All well and good, no rocket science there then, I hear you say. And to be fair this is a good strategy and makes good economic sense both from the governments point of view and the individual.
The problem is of course that no one expected what the government did next….which was to move the goal posts! in fact they didn’t move the goal post at all, what they did was moved the game entirely to a different field and didn’t realise that they hadn’t told anyone!
What ? I hear you say, well what they did was that they changed the business rates relief rules on vacant property thinking “aha more money for the Treasury!!!” Then they put the most ridiculous spin on it saying “well stop complaining, as a landlord you will have to reduce your rents to entice occupiers wont you?”
This approach (and my over simplification) you might say is complete nonsense….well is it?
The following is an extract of the crass and naive review and report by both ministers and central government, which incidentally is run by full time career politicians without a shred of business experience and thus no understanding of the impact of ther actions on the economy:
Landlords of retail and office property now have to pay full business rates after a three month grace period – whereas previously they received 50 per cent tax relief. A Treasury spokesman said: “Reforms to empty property relief are aimed at ensuring a fair balance between incentives to re-let property, and giving property owners a period of relief while they manage vacancies.”
There are a couple of worrying themes from this ridiculous position taken by central government as cited above. Yes the treasury has “whipped in” some £980 million each year into its coffers but the impact is far wider and far far more deeper reaching. One of the biggest employers in this country is the construction industry, and the one sector of that industry that was doing well was the industrial and distribution sector. The reason for this was that developers like Prologis and Goodman s had joint venture arrangements with the large pension funds. The developers found the site, the funds bought the site, the developers developed the site THE CONTRACTORS BUILT THE BUILDING (employement) the fund then retained the finished article.
However, it would seem that even they didn’t bargain on Mr Darling and Mr Browns kick in the teeth; the loss of empty rates relief on such large buildings. Over night the Treasury not only stopped the speculative development of large warehousing sites, they turned the construction industry work force into the “great unemployed” as well. The pension funds (oh yes they would be the ones we have been paying into for our retirement then!) have now got to carry the burden of a cash flow liability until these units are let which they never had to do before!!!
“Lower the rents then provide more incentives” says the arrogant politician….ummm well before you can lower the rents and entice a tenant to take the space, there has to be some demand to create a market, or didnt they teach you that at LSE?
And what about the small building owner that has done everything he was encouraged to do, by setting up his own pension scheme by buying his building? Well basically he is stuffed because the company that he had as a tenant – his own – has now gone into liquidation, and as such he has to now carry the burden of the loss of empty property rates relief, this has now gone, so his pension fund has gone as well!!
Thanks agin Mr Brown and Mr Darling, carrer politicians who would have them? not me not at any price!!! The likes of Hestletine and and even Tony Benn have more to offer by way of experience than these two.
