Business rates to affect London office occupiers.
Government rates to have a direct affect on London office space costs.
Property advice specialists CB Richard Ellis have warned that new business rates implemented on 1 April will have an impact on the way that offices are run in the capital.
The firm also noted that the bottom line property costs for office space would mainly affect companies and occupiers in the W1 London postcode.
The rating and taxation team from CB Richard Ellis believe that companies occupying space in W1 have seen an increase of around 40% in rates payments since April last year.
Occupiers in Mayfair are set to see the rates rise by an extra £6 per square foot. In comparison, those taking up office space in Soho and Covent Garden will see an increase of up to £4 per square foot.
The rise in rating costs is partly due to the introduction of the new rating multiplier by the Coalition Government. Following the changes on 1 April the multiplier will stand at 43.3p, an overall increase of 4.3% in line with September’s 2010 retail price index.
There is some concern that companies may begin to move away from the area in favour of cheaper locations with lower leasing and ownership costs.
“Many occupiers in London’s W1 will struggle to absorb these costs. This hike in rates, with the prospect of further increases over the next few years, may be the tipping point for media companies and professional services firms that are already considering cheaper alternatives to W1,” commented Stewart Smith, executive director of CBRE’s Central London tenant advisory group.