Call for government help to regenerate sector
Reviving a tax relief scheme could transform our city centres, says John Rodger
The Covid-19 pandemic has altered the way we work, creating huge uncertainties about the future role of offices and other commercial premises.
A report released over the summer suggested that £230 billion could be wiped off the value of UK commercial property, with the Office for Budget Responsibility forecasting a fall of almost 14 per cent in the price of offices and other commercial buildings this year.
When home workers do eventually return to the office, their numbers could be significantly reduced. A recent survey by Cardiff and Southampton universities suggested that nine in ten people who were forced to work from home wish to continue with some form of home working beyond the restrictions brought about by Covid-19.
Given the significant cost of office space and the exceptional economic challenges that lie ahead, it is likely that many employers will be keen to oblige them.
While technology makes it possible for many of us, working from home does not suit all sectors. It also brings limitations on effective customer engagement, client relationships and social interaction, all of which will remain critical factors for many employers.
So, in the future, we are likely to see workplaces adapting to better cater for these requirements, ensuring that office spaces with flexible, accessible and attractive amenities will continue to be in high demand, while poorly equipped premises will be harder hit by the fall in demand.
Just as other business sectors have been targeted for government support to help them overcome the devastating effects of Covid-19, commercial property is now in need of assistance. This is not only important for the thousands of people who make their livelihoods in the sector, but also for the wider public – many pension plans are heavily invested in office developments and other commercial property assets.
There are a number of stimulus measures that the UK Government could consider, which would greatly help the sector as well as making a contribution to a green recovery.
One consideration should be the return of the Business Premises Renovation Allowance (BPRA) scheme, which ended in 2017. BPRA helped enhance development and regeneration across the UK by providing tax incentives to encourage the conversion or renovation of commercial buildings in disadvantaged areas.
Over its ten-year lifespan, BPRAS helped regenerate sites in some of Scotland’s most deprived communities, stimulating private investment by offering businesses 100 per cent tax relief on qualifying costs of renovation or conversion of unused or derelict former commercial business premises.
This relief could potentially be extended to cover the conversion of commercial property assets into affordable housing – as John Lewis Group is currently considering for some of its property portfolio – to help address the current housing crisis and bring people back to city centres.
The commercial property sector faces huge uncertainties. Effectively targeted government support, such as a reinvigorated BPRA scheme, could turn challenges into opportunities which would deliver much wider benefits to society.
“BPRAS helped regenerate sites in some of Scotland’s most deprived communities”