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BHS closure leads to losses of £37m in business rates for landlords
8 June 2016
Experts have predicted that the closure of 144 BHS stores could result in losses of about £37m in business rates on vacant properties for landlords.
BHS filed for administration earlier this year after struggling with debts of more than £1.3bn. The failure to find a buyer means operations will be wound down with all stores closing in a matter of weeks.
Research by property consultants Daniel Watney LLP found that landlords leasing to BHS could expect an annual empty rates bill of about £37m as well as missing out on three months of rate relief worth £9.25m.
Landlords will not qualify for rate relief due to the empty rate exemption period being “eaten up” by administrators Duff & Phelps who have taken on the existing business rate liability whilst they continue to trade. Duff & Phelps’ liability will conclude when store trading ceases.
Properties may be labile for 100% of their bill once handed back to the landlord as a consequence of complex negotiations regarding lease surrenders.
The empty rates charges will be highest in London, followed by Sheffield, Manchester, Bristol and Cheshire. BHS’s flagship Oxford street store will have the highest empty rate with an annual cost of £1,682,966.
It is predicted that new occupiers taking on the vacant units will be “discount-oriented” such as Aldi, Lidl, Poundland and Poundworld. Other retailers that could be interested include grocers looking to expand their convenience stores such as Tesco and Sainsburys.