Commercial Property - Business Rates

[Anil24]

Me and my partner run a food business. We have been thinking about buying a shop for the food business. As we could not find any to suit our budget we decided to buy one further out of London and rent it and use the rent to pay part of our current rent for the shop.
The only ones we could find within the budget are away in the North. But upon doing our research we find that a lot of high street shops are empty and finding a tenant may become difficult.

We also understand that business rates need to be paid even if the property remains empty, which can become a burden making commercial property nonviable.

Could we please have your thoughts on what is best.
Thank you

 

[Scalloway]

a lot of high street shops are empty and finding a tenant may become difficult.

I've also seen in this forum people claiming that the landlords would rather leave them empty than reduce the rent as it would encourage their existing tenants to ask for a rent reduction.

 

[WaveJumper]

@Scalloway your correct if a landlord has a lot of rent reviews in the pipeline it does not pay to let the market know you've just agreed to a lower rent in the same location hence why they would rather it just stayed empty on the face of it seems crazy but true

 

[Anil24]

I've also seen in this forum people claiming that the landlords would rather leave them empty than reduce the rent as it would encourage their existing tenants to ask for a rent reduction.

@Scalloway, thank you, but I believe that they will still have to pay the business rates if it remains empty and that could be expensive. The council usually offer 3 months on empty properties, beyond which they start charging and this is a concern as if I have a commercial property and no tenants for a longer period then the investment could be at risk.

 

[Scalloway]

Big property companies have deep pockets and clever financial advisers. They may see paying rates on empty buildings as a necessary cost of keeping up rents in the long term.

 

[Mark T Jones]

I've also seen in this forum people claiming that the landlords would rather leave them empty than reduce the rent as it would encourage their existing tenants to ask for a rent reduction.

Additionally, the value of business property relies heavily on rental value - in many cases reducing the rental value will put them in breach of their banking covenants.

Savvy, professional landlords will always try to negotiate on concessions rather than rent

 

[WaveJumper]

Additionally, the value of business property relies heavily on rental value - in many cases reducing the rental value will put them in breach of their banking covenants.

Savvy, professional landlords will always try to negotiate on concessions rather than rent

Correct as usual top priority is always the valuation. I managed commercial properties which would be independently valued every month for the owners