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Business Rates - Should We Split?

Discussion in 'General Business Forum' started by anonuk, Mar 13, 2020.

  1. anonuk

    anonuk UKBF Regular Free Member

    302 44
    We are looking to move into a new premises in the near future. Our current premises is eligible for the full small business rate relief so we pay no rates.

    The new premises, however, has a rateable value of £13,500 which means we will need to pay around £270 per month in business rates. The new premises has a ground floor and a mezzanine floor and both have their own secure doors once you get inside.

    At present, the mezzanine floor is listed with VOA as 'internal storage' so has a fairly low rateable value, but if you take off the mezzanine floor and two of the four parking spaces, the rateable value for what's left would drop just below £12.000 and as such would qualify for full small business rate relief.

    So, my thinking is that my wife and I are directors of two ltd companies, so were thinking Company A could occupy the ground floor and Company B could occupy the mezzanine floor. We have also negotiated terms in the lease to say we can sublet the mezzanine floor to anyone we choose so this wouldn't be an issue for the landlord.

    I have spoken to VOA and in principle what I'm proposing is doable. The lady on the phone didn't seem to think there would be an issue with my wife and I being the directors of both businesses, but I'm just looking for opinions on whether you guys think this is worth exploring or any experience you can share?

    My main concern is that before we move in, the landlord will be converting the mezzanine to office space so if VOA come out and reinspect the property and then decide that we can't split it, we could end up with a new rateable value of more than £15,000 which would make the property unaffordable.
     
    Posted: Mar 13, 2020 By: anonuk Member since: Feb 27, 2014
    #1
  2. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    11,972 2,495
    Any change to the property opens up a revaluation chance, where you may well end up with a far higher rating on both
     
    Posted: Mar 14, 2020 By: Chris Ashdown Member since: Dec 7, 2003
    #2
  3. Talay

    Talay UKBF Big Shot Free Member

    3,876 811
    Equally, in the carnage that is retail in Q1/2 2020, it is likely to be a devaluation.

    I have a landlord being pushed by Costa for lower rent or they will walk, despite the location being very profitable, simply because there are other available premises nearby at far cheaper rents. Their lease is upward only but they will exercise a break if the landlord doesn't reduce the rent.

    I also have landlords offering no increase ahead of forthcoming break clauses and if any want to raise rents, I think we will walk away in some instances. I can see 12 months rent free on a new place being very easy to obtain.
     
    Posted: Mar 15, 2020 By: Talay Member since: Mar 12, 2012
    #3
  4. anonuk

    anonuk UKBF Regular Free Member

    302 44
    Thanks for the replies so far. We have since decided to leave the valuation as it is as we cannot afford the risk of it being revalued at a higher rate.

    We actually signed an agreement for lease for this new premises in January and I’m now at a point where I need to look into possibly delaying the start date of the lease in the wake of Coronavirus.
     
    Posted: Mar 15, 2020 By: anonuk Member since: Feb 27, 2014
    #4
  5. Chris Ashdown

    Chris Ashdown UKBF Legend Free Member

    11,972 2,495
    Thats about rent the OP was questioning Rates
     
    Posted: Mar 16, 2020 By: Chris Ashdown Member since: Dec 7, 2003
    #5