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Renting or owning your business premises?

Having recently taken part in an FSB Wales Round Table Seminar on the subject of Non-Domestic Rates in Wales, I thought I would base my latest musing around this very subject.

Working with a number of home based businesses who are considering moving to premises makes this subject all the more pertinent. We ask the question – should you rent or purchase? Because the answer has a big impact on your forecasts.

If the proposed changes to NDR come to fruition then you may be better placed to become a tenant. In simple terms, the proposals are to scrap NDR in its current form and introducing Land Tax in its place, thus placing the tax burden on to the owner. After all they receive the income, be it from their own business activities or by renting the premises to another business. It is likely however that the owner will merely pass on the tax by way of increasing the rent but is that such a bad thing? The ceiling price can only go so high and greedy landlords will just lose out by tenants leaving and going to a more competitively priced premises.

Another benefit occurred to me on my drive to my next appointment and this is just my own thoughts – driving around Wales you will see a large amount of premises no longer in use, these are owned by someone and that someone has no incentive to bring the premises back to use. Surely if it was costing them money by way of Land Tax they would be keen to raise an income from it? If they received a tax rebate to off-set the costs to bring it back in to use many more business will benefit, from the builders carrying out the work, the landlord receiving the rent and in the end the tenant. Once the landlord as fully recovered the costs of bringing the premises back to use they would then be subject to land tax once again.

Whichever way the NDR vs Land Tax debate goes surely it is time we think of the bigger picture rather than just concentrating on the numbers? Either way you as a business should fully explore which is best for you, rental or ownership?

Kath Hiscock – Director of Client Services

 

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