Certus Login   Client Area   ☏ 01785 825501 

growth

UK commercial property up by 3.5%

According to the latest figures from the IPD UK quarterly property index, total returns on direct UK commercial property rose by 3.5% in Q2 2015: but is it all good news for investors and landlords?

Continued growth

There are certainly plenty of signs that commercial property is likely to deliver reliable returns for at least the next 12 months. 

Research from CBRE shows that prime rental values in UK commercial property rose by 5.4% in Q2 and, perhaps even more significantly, The Royal Institute of Chartered Surveyors (RICS) reported that demand for UK commercial property rose for the eleventh consecutive quarter, while available space fell for the ninth time in a row. This bodes well for both capital values and rental yields.

Competitive environment

Consistent improvement has increased competition for prime investments, and not just from UK based investors. Lambert Smith Hampton’s UK Investment Transactions Report(UKIT) shows that just over 50% of Q2 purchases were made by overseas investors, and 36% of RICS members reported an increase in enquiries from those looking to buy from abroad.

Given the extent to which overseas investment in the London property market has forced many commercial landlords to consider moving their money to the regions, it may be wise to keep track of areas where an influx of funds could push prices above fair market value.

Spotting success

Another major trend cemented in Q2 2015 was the growth of commercial property yields across the country. UKIT figures were driven largely by strong investment in the regions, and RICS members are widely agreed (95%) that commercial market valuations are still at or below fair values – leaving headroom for more capital growth, perhaps as much as 10% according to RICS chief economist Simon Rubinsohn. The exception, however, being the former economic powerhouse of London, where 50% of RICS members say valuations are now ‘expensive’.

There’s also a divide between commercial property types. IPD figures for Q2 showed that office space delivered returns of 4.9%, industrial property 4.3% and retail just 2.2%.

Nonetheless, with rising demand and an improving economic landscape, there are still plenty of opportunities to be seized by savvy commercial landlords and property investors, as long as they're willing to look outside the capital.

If you need help recouping rent arrears, contact one of our advisors today.

How is the cloud helping UK SMEs?

According to a survey by BT and the British Chamber of Commerce, the number of SMEs using cloud computing has increased by 15% over the past 12-months. But why is the cloud becoming so important to small businesses?

What is the cloud? The cloud

‘The cloud’ is the colloquial term for a network of servers – remote computers that are accessed online. It’s generally used to deliver two types of service:

1. Storage, e.g. Google Drive and Dropbox, which enable users to upload, store and share files. 2. Computing (software), e.g. Adobe Creative Cloud or Microsoft Office 365, which allow customers to run programs via the Internet, without download or installation.

These services are generally accessed via service provider websites, and are paid for by monthly or annual subscription.

What are the benefits?

A KPMG survey of around 800 tech industry leaders identified cloud computing as the technology that will have the greatest impact on driving business transformation for enterprises.

Where employees would once have had to be in the office to use certain software or access important files, cloud-based systems mean that they can access them anywhere, using any machine, which has huge cost-saving implications.

Enabling employees to work remotely frees businesses to cut overheads like office space and computer hardware; but it also means the workforce is both flexible and scalable.

Employees can work at times that suit them to boost productivity, or work in shifts to meet client demands. If a company grows, new staff can be hired without additional investment in computers and software.

What are the limitations?

Kester Mann, Principal Analyst at CCS Insight, believes UK SMEs are suffering from under-delivery of superfast broadband connectivity (just 56% currently have access to the service), and fears that “they don't have the time or resources to compare offers because they're smaller."

The latter point chimes with wider concerns over cloud computing. KPMG says 53% of executives are concerned about data loss and privacy, and 50% are worried about intellectual property theft. These are serious risks that SMEs must devote time and manpower to addressing if they are to effectively harness the power of cloud computing.

Some efficiency savings still happen on the ground though. If you need help recouping unpaid debts in a sensitive, forward-thinking way, contact a Dukes Bailiffs advisor today

The impact of Osborne's Budget on British SMEs

Since the Chancellor delivered his budget on the 8th of July, there has been fierce debate about the pros and cons of the new measures – but nowhere more so than among SMEs.

Tax and red tape

The biggest boon is the cut in corporation tax, which will fall to 19% in 2017 and 18% in 2020, the lowest of all the G20 economies. Reforms to dividend tax could mitigate gains for some, however, as a £5,000 tax-free dividend allowance will replace more generous dividend tax credits. UK Summer Budget 2015

Elsewhere, the annual investment allowance will be permanently set at £200,000. This figure will disappoint the many who called for £500,000, but it is undoubtedly better for businesses than the £25,000 allowance previously scheduled for 2016. This new, fixed, allowance will encourage growth and could add $1bn to the GDP by 2020.

Living wage

From April 2016, the National Living Wage will be a legally binding minimum hourly rate of £7.20 an hour for over 25s, rising to more than £9 an hour by 2020.

Federation of Small Businesses (FSB) chairman John Allan says the changes “pose significant challenges for many small firms, particularly those in the hospitality, retail and social care sectors’’, and Blick Rothenberg tax partner, Frank Nash, calculates that the changes will push up staffing costs by 4%, which could affect inflation.

The Employment Allowance increase from £1,000 to £3,000 will offset these costs to some extent, although the new rule only allows employers offsetting up to 2,000 hours.

Regional growth

The announcement of new ‘enterprise zones’, where small businesses will pay reduced taxes, should help to create more start ups, particularly in the ‘Northern Powerhouse’ of Liverpool, Manchester, Leeds and Sheffield where transport links will also be improved by an extra £30m grant to Transport for the North. Elsewhere, a £10m programme will bring broadband to underserved areas in the South West.

Unmet challenges

We were particularly disappointed to see the issues of business rates and late payments left unaddressed: particularly in light of stronger measures to force businesses to pay their taxes accurately and on time.

With small businesses heavily burdened by late payments from larger rivals, and now facing larger wage bills, ensuring prompt payment and stable cashflow has never been more important.

For help reclaiming unpaid debt, contact a Dukes Bailiffs advisor today

Talk to us