Business rates are currently a huge burden for retailers and alongside the current situation has contributed to store closure and job losses across the country. The Government is assessing potential changes to be made to business rates and the methodology and administration for calculating and collecting them. The areas being reviewed include measures to enable more frequent evaluations, improvement relief and support for investment in green plant and machinery. The business rates multiplier continues to be frozen for 2022 and 2023.

Businesses may wish to respond to the consultation to have their say in the impact business rates has and influence potential future changes. Businesses will need to be aware of any consequential changes that occur to ensure compliance and to be aware of the effect this could have, if any, on business costs. 

On 12 May 2021, HMRC published a consultation paper purporting to discuss ways of simplifying the VAT land exemption but the paper floats some potentially far-reaching changes to the VAT treatment of land transactions. These options for change include (i) removing the option to tax and making all land transactions exempt, (ii) making all land transactions taxable at a reduced rate, or (iii) making all commercial land transactions automatically standard rated but with an option to exempt.

Be alert for further proposals that may follow as a result of this consultation in case they could impact your business.

The real estate sector is a major contributor to greenhouse gases and major consumer of non-renewable energy sources.

The Environment Act introduces key targets and provisions for the advancement of greener business and prevent environmentally harmful practices. For example, a legally binding long-term target to improve air quality and reduce fine particulate (PM2.5) emissions by October 2022. The Act is wide reaching and gives the Government's 25 year Environment Plan statutory footing. Some of the areas prioritised are air-quality, environmental governance and recall, water and biodiversity.

Portfolios should be reviewed to identify environmental and sustainability issues for potential compliance risks and changes that may be necessary to meet new targets and strengthen ESG principles in the real estate sector. 

This could include review of: environmental compliance – particularly around permits, consents, discharges and waste duty of care; access to environmental information and data management; asset reliance and optimisation – especially around smart assets, HVACs, retrofit and adaptation for meeting targets, and waste and end of life considerations. This may require amendments and green lease provisions should be considered.

The extension to the moratoria on forfeiture of commercial property on the grounds of non-payment of rent or other sums due and restrictions on the use of Commercial Rent Arrears Recovery have been extended to 25 March 2022.

Tenants should be making plans now to address any accrued and ongoing lease liabilities and to engage with landlords to try and reach agreement in anticipation of the lifting of the moratorium. The Government has recently announced that they intend to set up a new arbitration scheme to help commercial landlords and tenants settle disputes regarding rent arrears.

In 2021 the Scottish Government announced a significant shift is required to achieve net zero emissions by 2045. The intention is for a place based approach to the transition to net zero and to rebalance the planning system so that climate change is a guiding principle for all plans and decisions and to focus efforts on actively encouraging all developments that help to reduce emissions.

This is not meant to be about restricting development but an opportunity for the real estate sector to help stimulate the green economy by facilitating innovations, greener design and place-based solutions. The potential direction of development and investment could change dramatically.