Commercial property owners whose portfolios include serviced offices could be in for a rude awakening upon receipt of the next business rate bill from the Valuation Office Agency (VOA). Thanks to lobbying efforts by half-a-dozen of the most powerful local councils in the country, the VOA appears ready to change the way it bills serviced offices.

According to recent news reports, property owners in the six council areas have begun receiving bills that treat their properties as single units. Previously, each office within a serviced property was considered separate and distinct. The VOA billed each one separately. But now, it appears as though a property’s entire business rates bill will be assessed against the property owner.

Tax Bills Are Going Up

If the new policy is carried across the entire country, it would mean higher tax bills for every serviced office owner. In some cases, this could mean bills three or four times higher. Such high tax bills could legitimately jeopardise a lot of businesses.

It is easy to say that property owners could simply pass on the higher taxes to their tenants by way of higher rental rates. But it’s not so easy. The higher rents required to cover a consolidated tax bill would be higher than the tax rates individual businesses already pay.

In reality, serviced office owners would be charged a tax on the value of their properties whether all their spaces are rented or not. So if a serviced office property isn’t completely full, that portion of the business rate comes out of the property owner’s pocket. No property owner will pay that willingly. Instead, they will raise rates high enough to cover taxes based on average occupancy.

Easier for Council Administration

It is understandable that local councils would lobby the VOA to make changes. It’s a lot easier on them from an administrative standpoint. It also means higher revenue on a more consistent basis. Ultimately, councils benefit while property owners pick up the tab.

What the councils seem to be forgetting is that driving property owners out of business isn’t going to help their tax receipts. But that’s a different topic for another post. The important point here is that billing property owners for the entire business rates assessment is going to put some of them in financial jeopardy.

We Are in the Market to Buy

Times are tough right now. Business finances are tight, as well. We want you to know that we are in the market to buy commercial properties. If you own one or more serviced offices, we would like to learn more about them. We would like the opportunity to discuss a possible sale.

There may not be a better time to sell your commercial property than right now. The way things are going, commercial property values continue to slide while the government is looking to make changes to tax laws in order to shore up its own finances. If anyone gets the squeeze, it is likely to be commercial property owners.

You Don’t Need to Headaches

We are willing to buy your commercial property despite the possibility of higher business rates. We have the resources to overcome whatever the VOA decides to do. Meanwhile, you don’t need the headaches that come with a single consolidated tax bill. You don’t need the headache of explaining higher rental rates to your tenants.

The chances are good that the VOA will implement single-office billing nationwide at some point. It doesn’t make sense for them not to. Unfortunately, that spells trouble to owners of serviced office properties. If you are one of them, let’s talk.