In the present financial climate with many businesses struggling with cutbacks, lower customer spending levels and a significant increase in online trading in both retail and businesses, many companies are welcoming the new government policies of tax increment financing (TIF) and business rate retention.
The UK TIF model is based on reinvesting a proportion of future business rates from an area back into infrastructure and related commercial property development. It applies where the sources of funding available for a scheme to deliver economic growth and renewal cannot cover the cost of infrastructure required by the scheme. Often this will be a regeneration project, and although UK TIF could be used more widely.
This is positive news for the commercial property industry as it will enable and encourage companies to get established and for those already established to continue to trade and increase growth in the future.
Both proposals are already government policy, however, they are tied to the local government resource review, due to be published in summer, which could result in a delay of upto 3 years before it is fully implemented.
While most business leader swelcome the policies some are
concerned that the actions will not happen quickly enough. Robin Dobson, Hammerson director for UK retail development said: ‘There has been full support by the property industry to the introduction of TIF’s, what is now required is the political support and importantly drive to ensure this is implemented.’
BPF chief executive Liz Peace agreed but added: ‘If this Government is serious about a private sector led economic recovery it has got to create an environment that allows this to happen now, not in two or three years’ time.’
Don Baker FRICS IRRV (Hons) is Director with Colliers International (UK) Plc. Predicts that the success of the policies depend on whether they lead to additional trade from outside local areas or merely displaces trade from one area of a locality to another. He is also concerned about a ‘double counting’ of tax benefits where schemes are closely located and a national co ordination is required to prevent such occurrences.
The full effects of these policies on the commercial property market is uncertain at present, although any measures that help businesses to develop and grow must be a positive factor in a time that has seen many businesses close or reduce levels of business.
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