Colliers urges Treasury to help smaller businesses in serviced offices who may be missing out on much needed grants

Business Rates experts offer alternative solutions so thousands of businesses don’t miss out.

Manchester, April 3rd 2020

Business rates experts at real estate advisors Colliers International are calling on the Treasury to introduce a flexible policy towards many smaller businesses which may not currently be able to access recently announced Government grants, due to the nature of how they pay their business rates bills in serviced offices. It is estimated that the country’s small business owners could be missing out on £100m of vital support.

Last week the Government announced help to businesses with their running costs, using the business rates system as a model upon which to allocate grants. A cash grant of £10,000 was made immediately available for small businesses with a Rateable Value of £15,000 and under, whatever sector they might be in. These are effectively smaller businesses eligible for Small Business Rates Relief or Rural Rate Relief and include many office occupiers.

The problem comes for some smaller business who rent space in serviced offices where the business usually pays for one fixed all-inclusive monthly service agreement to their office provider to cover rent, rates, service charges etc. The operator claims the small business rates on behalf of the business. For many of these businesses the operator will know exactly what proportion of rates each tenant is liable for (and thus can claim relief on)- but in some cases a more generic approach is taken. In other cases, the operator or the VOA (the government body that assesses business rates liability) has not yet split the assessments of the overall property into individual businesses space units or was in the process of doing so prior to the Covid-19 outbreak.

Colliers estimate that there could be 10,000 such smaller businesses in serviced offices who have no established individual rating assessment, and as things currently stand, such businesses are not able to claim the much-needed grants. Colliers believe this represents about 5% of the small business market.

John Webber, head of business rates at Colliers International, which handles about 90 per cent of the businesses in the serviced operating sector said, “ In deciding to allocate grants based on RVs,  the government was aware that about 5 per cent of smaller businesses, which are in serviced offices might lose out, but the decisions had to be made quickly and support announced as soon as possible. There is no criticism of the government; it acted with speed, but it must acknowledge that this is a big problem.

“Now that we are seeing some of the fallout for these small businesses located in co-working and serviced office space, we request the Treasury to show some flexibility in its approach to this issue. We need the Treasury to inform the Billing Authority which is handling the grants that such small businesses are an exceptional case and allow us to illustrate who should be eligible for the grants, on a building-by-building basis. We believe we would be able to do this quickly, enabling such companies to claim their grants they so desperately need.”

He continued: “These are torrid times for businesses, many of whom are struggling to stay solvent, and are desperately in need of the grants on offer. We have already started to petition the Treasury and we hope that the spirit of support and common sense that the government has already shown to business, is extended here. We at Colliers will be doing everything in our power to make sure both our clients and their tenants are looked after and this issue is resolved as quickly as possible.”

Richard Morris, UK CEO of IWG, the world’s largest flexible workspace operator, added: “Some of our small business customers have told us that they are struggling to claim their grants, and we want to help. We support Colliers’ proposal to the Treasury to help identify those companies who have so far fallen through the gap and ensure they receive this vital support.”