Small to medium size enterprises/companies (SME’s) are struggling with the increase in the rate of VAT which was introduced at the start of the year. This has caused the number of business failures to rise by 20% compared to last year and those who are the worst affected are in the retail, travel and lesiure sectors.
This is delivering a crushing blow to commercial property landlords who are seeing their tenants disappear before their eyes. Where companies who occupy shops, offices and industrial units are no longer able to survive, one of the first things they do is stop paying their rent. Landlords, who no longer receive this income, then face having to meet loan interest payments out of their own pockets which to many is not possible. Therefore, they have to either sell quickly, at rock bottom prices, or face having their properties repossessed.
Many are choosing to sell as opposed to having to suffer the agony of a repossession order, bankruptcy proceedings, receivers or administrators. Some people are choosing to sell at prices which are less than they paid, but more than the outstanding debt, so they can at least pay-off the lender and pocket some equity. In this day-and-age, that’s not a bad position to be in!