The boss of one of the UK’s largest landlords, Hammerson chief executive David Atkins, has branded business rates as “crazy”, joining the growing chorus of top business leaders calling for a review.
Atkins said as a landlord Hammerson has tried to provide a value-for-money proposition for retail tenants in the tough climate by altering rents and also “driving down” service charges, but that the growing business rates burden has turned into a “crazy situation”.
Atkins pointed out the tax was initially designed to fund local services, but that now they have become a revenue stream for local government.
“The system is relatively outdated and needs to be reviewed,” he said.
Atkins made the comments as Hammerson, which owns shopping centres including the Bullring, revealed net rental incomes up 9.9% to £140.4m in the six months to June 30.
Atkins said that while “conditions continue to be pretty tough” he remained optimistic on the outlook for retail.
“We’re definitely seeing improvements on a macro level, the data is suggesting we’re turning a corner,” he said. In recent weeks data has emerged reflecting a rise in housing transitions and a fall in unemployment.
Hammerson, which also has operations in France, said the French economic recovery is about 18 months behind that of the UK. “There is weaker business confidence in France thank the UK, which flows through into weaker consumer confidence,” said Atkins. However, he pointed out that French consumers are less indebted than their UK counterparts, meaning when the recovery comes in France it may be speedier than in the UK.
Atkins said Hammerson lost 0.6% in revenue due to retail administrations, and subsequent store closures, in the period across the group. HMV, Jessops and Blockbuster all collapsed in the first quarter while the administrations of ModelZone and Dwell in the second quarter have also resulted in store closures.
However Atkins highlighted that there are only 25 stores out of 42 schemes that remain unlet as a result of administration, and that the impact has been short term. “I’m not saying [administrations] have no impact but it’s one we can absorb,” Atkins maintained.