Newsroom

Let Landlords pay for business improvement districts, urges BPF

The British Property Federation has today welcomed the Business Rate Supplement (BRS) Bill, announced in today’s Queen’s speech, but warned that funding for business improvement districts (Bids) may suffer as a result.

A Bid is a is a public-private partnership in which businesses in a defined area elect to pay an additional tax in order to fund improvements to the district's public realm and trading environment. For example, retailers in London’s west end use a Bid to enhance security and improve street cleaning.

James Anderson, BPF policy officer, said:

“Times are tough for owners and occupiers and, while the additional funding raised through the business rate supplement will benefit London’s infrastructure in the long term, we are concerned that funding for existing business improvement districts may suffer as a result.

“We thereby urge the government to amend the existing legislation to allow Bids to raise finance from property owners on a mandatory basis, where they consider it appropriate and possible to do so. This will be fairer for those landlords that already make voluntary contributions and for occupiers such as small businesses, who Bids might turn to for any funding shortfall as a result of the business rate supplement. Ultimately, such a move would allow Bid finances to be put on a more sustainable footing.”

For more information contact Andrew Teacher at the BPF on 020 7802 0113.

Notes for editors

Bids traditionally raise the majority of their funds from the largest occupiers; exactly the same bracket likely to be hit with the requirement to pay the 2p supplementary business rate supplement (BRS) levy.

As such, Bids are particularly exposed to a funding freeze from these occupiers when they go up for re-ballot in 2009-10, as occupiers act to downsize their spending in light of the credit crunch.

To sustain their current incomes, many Bids are likely to have to seek alternative sources of funding from either small occupiers or from property owners. There are two potential ways this could be done. The first is to get smaller companies who currently do not contribute to Bids to do so, as they will probably be exempt from paying the BRS. The second is to give Bids the means to raise funds compulsorily from property owners, where the Bid decides that it would be beneficial, cost effective and possible to do so. We would like to see government amend the current Bid legislation to allow property owners to be involved more formally in Bids.

The current legislation does not allow Bids to include property owners in the levy, except on a voluntary basis – a situation that leads to the free-rider dilemma where some landlords do not pay the Bid levy but enjoy the benefits, whilst others pick up the tab. We would like to see Bids given the power to choose to include property owners in their schemes where they consider it appropriate to do so. This facility is available in Scotland and would be welcomed south of the border to help mitigate the impact of the BRS on small occupiers, and help ensure Bids have sufficient funding to continue their work