Fasken Martineau LLP - General - London,

Date: 01 Oct 2009

Empty rates and the Healthy Planet solution.

Land Securities and private landlords are quick to sign up.

Since the introduction of the government's unpopular empty rates tax in April 2008, economic conditions have worsened considerably. Research conducted by the Local Data Company and supported by the British Property Federation has shown that the number of empty shops throughout England and Wales has risen from 4.5% at the end of May 2008 to 12% at the end of June 2009. Today, one in seven shops is empty and many businesses occupying office space are also downsizing.

There are a number of commercial schemes in operation that will, for a fee, help landlords and lessees to reduce their rates bills by installing short term tenants for a limited period of time, thus resetting rates advantageously. However, these initiatives do not suit all landlords. And whilst they can improve the bottom line on a shop or office that is not generating revenue, these schemes cannot improve the forlorn sight of an empty shop or ground floor office which, when seen in significant numbers, can have a corrosive effect on confidence in a high street or shopping centre.

To address the problem, the innovative social enterprise and global charity, Healthy Planet, is, with help from legal advisers, international law firm, Fasken Martineau LLP, launching an 'Instant Rate Saver' initiative to help landlords significantly to reduce their empty rates bills, help a worthy cause and improve the external look of empty shops and town centres right across the country. Fasken Martineau is assisting Healthy Planet by drawing up a 'tenancy at will' contract and the law firm is hosting a seminar to raise the charity's profile amongst landlords and agents.

The agreement will allow landlords to work with the charity whilst also having the security of knowing that they can safely operate on a short term lease basis. In return for a small donation to the charity, typically a 25p multiplier on a £1 rateable value, compared to the typical 48.5p, Healthy Planet will install in empty shop and ground floor office windows attractive, professionally produced posters describing the charity's UK and overseas work.

It has already convinced Land Securities, private landlords and charity rent reduction specialists, Rent Re-form of the benefits of the scheme.

Nick Peel, head of retail property management at Land Securities, said of the initiative: "Land Securities is committed to leading the green agenda at its 24 shopping centres across the UK, so we are pleased to be able to support Healthy Planet in their innovative use of vacant commercial space which promotes environmental messages to the community and enliven the shopper's experience."

The scheme also has the option to raise footfall within a shop or shopping centre and help landlord's profile in the local community by association with Healthy Planet's work with UK schools and educational organisations such as the Geographical Association and Young Enterprise. Landlords like Land Securities have expressed a keen interest in giving youth the chance to run their own shop for a day and Healthy Planet's work allows them to do that.

Mall Corporation who are the UK's leading community shopping centre brand with 20 malls across the UK have also agreed to work with Healthy Planet and plans are at an advanced stage for a trial in a prime unit at The Mall, Uxbridge which has an average weekly footfall of 180,000 people. Andrew Davy, Centre Manager of The Mall, Uxbridge said: "We have identified a large unit in a prime location within the shopping centre that we want to use for this initiative. Discussions will shortly be taking place with the tenant in question and I am optimistic that they will see the value of this scheme because it provides a financial benefit to them as well as an aesthetic benefit to the shopping centre as a whole."

Shaylesh Patel, founder of Healthy Planet, said: "Transferring empty rates liability to other commercial organisations, even at zero rent, doesn't necessarily allow landlords the flexibility quickly to switch to long term tenants when the market improves. By joining forces with us, Land Securities and other nimble private landlords have recognised that in addition to associating with a worthy cause that focuses on people and the local community, they will save between 50 and 60% on business rates over a typical 12 month period as well as benefiting from a no-notice termination option. We estimate that they will reach break even in less than 5 weeks."

Partner, David Connick, head of the property team at Fasken Martineau, added: "We appreciate just how much some of our clients and other members of the property industry are struggling in the current difficult market.

"Whilst we, of course, support the payment of taxes we at Fasken Martineau are sympathetic to the strength of feeling in the sector against what they view as an unfair tax imposed on properties that have no revenue which many landlords can ill afford to pay right now. We are, therefore, delighted to play our part in assisting the Healthy Planet Foundation in its endeavours to create a legitimate means of both raising awareness of its valuable work and, at the same time, assisting landlords by reducing their rates bills. For a landlord, it is a much greener and more acceptable alternative to knocking out staircases and roofs as a means of reducing their rates liability. Using our network of offices around the world, we are also investigating the possibility of rolling out the initiative in other countries, helping Healthy Planet and our global landlord clients in those countries." concluded Connick

TV Naturalist, Nigel Marven, who is also getting ready to be featured on some of Healthy Planet's posters around the country said: "I am delighted to be able to support Healthy Planet again and bring the environment world into cities and town centres. Using posters is a great way to raise awareness in an engaging way and reminds us of the wider world around us. My thanks goes to landlords like Land Securities for supporting Healthy Planet's clever idea of making the most of empty spaces and making shopping areas greener!"

Stephen Fry, President of the Great Fen Project added: "I have been a fan of the Healthy Planet Foundation since February this year when they agreed to help us with the Great Fen Project which aims to create 3,700 hectares of wetland to support a variety of wildlife in Cambridgeshire. I am delighted to support Healthy Planet's new initiative because it will build awareness and funds for our cause. The posters will show how easy it is to go online and become an armchair volunteer and adopt land in the Great Fen. The Fens stand as one of the most misunderstood, neglected and extraordinary features of the British landscape. I am very proud to be involved with a new drive to protect, understand and evangelise this unique part of our country."

Poster 1 to be used at West 12 Shopping Centre Shepherds Bush Green.

Where do I go now?: » View the latest news items » View the news archive » Subscribe to Weekly Property Newsletter » Submit news