Why Business Property Landlords Are Suffering

Over the past decades if you had asked investment advisors what they would recommend you to put your money in to I would virtually guarantee many would have responded with, among other suggestions, ‘property’. That’s because historically ‘bricks and mortar’ has always bucked the trend, and done well even when other investments were going through lean times.

That has all changed now of course, as property prices in the US and in the UK have been badly hit by the recession. Homes in some places have been almost given away, as prospective buyers have been holding back from jumping in the house market, loans have been much harder to get, and the prospect of unemployment has hit buyers’ confidence. The property slump hasn’t just hit residential homes, however. As businesses struggle to remain solvent many are closing up, and business properties are becoming empty, and remaining that way for long periods of time.

Whilst in some other parts of Europe they are seeing an end to their recession, in the UK it is not getting any better. The pound is faltering against other major currencies such as the US dollar and the Euro. Japan is another country to emerge from the recession, and the US is expected to do so in the third quarter.

So, what about landlords who own business properties in the UK? Many without question are suffering a major loss in income. Estimates put the figures of store closures at 26,000 since the start of the economic crisis. That is something like 10 per cent of the almost 260,000 stores being tracked, in more than 700 town centres. Closures have affected stores right across the board, from corner shops right through to major retail chains. The same is true for offices, as entire blocks are becoming vacant.

The results are that people are put out of work at those premises, and other suppliers are often hit because their customers are disappearing, a sort of ‘knock-on’ effect. And as far as the landlords of those business premises are concerned, they not only lose their income from the closed down business, but to make matters worse, landlords are still required to pay business rates on their properties even if their tenant moves out.

Certainly people will need a place to live, so eventually the housing market will pick up. But, as far as business properties go, that is one investment that I reckon should be given a miss for a while yet.