Retail agents are experiencing a surge in deals as the deadline for the new stamp duty on leases, announced in this year's budget, looms.
Until now, companies have only paid tax on the first year's rent under a lease, but from next month they will be required to pay tax on the net present value of all rent due for the term of the lease. The change could raise some tax bills eight-fold, while raising another£200 million for the exchequer.
Last week, parliament debated the issue and Oliver Letwin, Michael Howard's newly-appointed Shadow Chancellor described the changes as a new 'high street stealth tax'.
RICS commercial property spokesman Kevan Carrick said the retail sector would be hardest hit, because multiple retailers, by definition, sign a larger number of leases than other businesses.
'For new tenants seeking prime shops or offices, the increase will be a significant additional up-front cost,' he said. 'It is particularly bad timing because the new burden comes just as demand in the commercial property lease market is beginning to stabilise after nine consecutive quarters of decline.'
In addition, agents have reported a rush of leasing activity as companies try to secure new leases.
Lambert Smith Hampton chief executive Chis Boulton said: 'These changes have resulted in a distortion of the commercial property market, as businesses attempt to renew their leases before December 1, as well as an increase in companies taking shorter leases.'
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