Since October 2008, in what the City called “The Lehman Quarter”, but I prefer the more relevant term for us of “The Woolworth Quarter”, High Street retail property has seen falling rents and values. The Great Stumble by the financial services sector in quarter four of 2008; the increased Business Rates imposed in April 2010, based on the peak rental values pertaining in April 2008; the on-line sales penetration increasing to 20% of retail spend; and the impact of the increased minimum wage, were the four factors that created the perfect storm the retailers and the landlords had to weather, between 2008 and 2012. Since 2010, successive governments have cocked a deaf ear to the desperate pleas of occupiers and owners for the realignment Business Rates with rental values that have often halved since 2008. Why? Because Business Rates yield some £30 billion per annum, in a tax that is 98% effective, and is collected for the government by the Local Authorities. The retail sector comprises 5% of the UK economy, but pays 25% of the Business Rates bill. How unfair is that? Nevertheless, despite these burdens on the sector, by 2012 rents had stabilised and demand was returning in most of our stronger High Streets. In 2015 the Conservatives were re-elected with a clear majority and by 2016, the UK’s economy was the fastest growing of all the G7 countries. With a centre-right government able to ease the austerity measures, as the public finances had been rebuilt, the future looked bright for UK plc over the next five years. The only fly in the ointment was the Conservative Manifesto commitment to hold a referendum on EU membership, conceded to shoot UKIP’s fox and quieten the Tory Eurosceptics. The Cameron/Osborne faction saw no likelihood that the country would vote Leave in the June 2016 Referendum. The subsequent political turmoil, which has seen three Prime Ministers in four years, and the economic damage, estimated to have cost the UK economy £100 billion, just as a consequence of the decision to leave, has now been totally eclipsed by the coronavirus pandemic, which has shattered our economy in 2020. It will probably take a decade for the UK to recover from the double whammy of Brexit and Covid. What is remarkable is the resilience the commercial property sector has shown despite the havoc. In the 50 plus years I have been active in commercial property investment, norm yields have been 5% for shops, 7% for offices and 10% for industrials. One fundamental reason for retail commanding a keener yield is because its obsolescence factor is minimal. Offices need an expensive refit after 10 or 15 years, and industrials need a rebuild after 20 years, but shops just need a refreshing shop fit every few years, and the Tenant usually pays for that. Today we see shop yields around 8%, offices still around 7%, and industrials at an unprecedented 4%, as these buildings are repurposed for on-line sales direct to the public, thereby eating more of the High Street’s lunch. The American politician, Donald Rumsfeld, said there are known unknowns, but there are also unknown unknowns. Rental values post-pandemic are unknowns and, as a consequence, so are the capital values. The Private Investor is presently seeing investment opportunities to buy at auction in the High Street Retail sector, at prices 40% or so, below traditional pricing norms.  So, if a good High Street shop investment can be bought today to show say 9%, with four years left on the Lease to a reliable covenant, will the Lease renewal at the then prevailing rental value four years hence, giving a yield reduced to say 4% or 5% be regarded as a good return, benchmarked against other asset classes or other property sectors? We do not know – it is an unknown unknown, but the Private Investors, currently so active in the Auctions, seem to think that is a fair bet – and so do I. Anthony H Ratcliffe Ratcliffes Chartered Surveyors

The Chancellor faces an unprecedented challenge to repay over £300 billion of National borrowings taken to fund the cost of the pandemic so far, together with at least £100 billion to off-set some of the initial costs of Brexit. Suggestions have included a 5 year Wealth Tax, which is impractical because it will raise much less than envisaged and risks our high earning entrepreneurs departing for more favourable fiscal climes; a tax impost on ISAs, which would break successive government commitments and be deeply unpopular; a raid on pensions, where the benefits have already been significantly eroded by both party administrations; an increase in Cooperation Tax, which is already high enough that all the American behemoths invoice their UK customers via lower tax regimes, such as Ireland and Luxembourg; or introducing a capital gains tax on first home sales, a holy grail that any government would change to its electoral peril. The solution is a simultaneous and comprehensive permanent reform of the commercial and residential property taxes. For the last ten years, since the 2010 imposition of the 2008 business rates revaluation, business has borne the burden of egregiously excessive business rates, yielding in 2019/20 some £30 billion to the Treasury. Of this, 25% was paid by the retailers, although the retail sector comprises only 5% of our economy. Since the introduction of Council Tax in 1991, the home band rate values in England (though not in Scotland or Wales) have incredibly remained unchanged, whilst house values over that thirty-year period have trebled. The highest English Council Tax band is still £320,000 plus and the average top rate Council Tax payable is circa £2,500 per annum, whether the homeowner’s property is worth £320,000 , £3.2 million , or £32 million . Since the Great Recession of 2008/9, due to the subsequent austerity measures, local authority revenues have been insufficient to finance their traditional responsibilities to their communities, leading a number of LAs to undertake risky commercial property investment ventures in the hope of higher returns to help them meet their commitments. The excessive Stamp Duty rates, ratcheted up by both Gordon Brown and George Osborne, when Chancellors, and now at an eye-watering 12% top rate for UK residents, discourage mobility and the consequential boost to the local economy from house moves is lost. It has been estimated that the average house move adds £38,000 to the GDP. Instead, unsuitable loft extensions and disruptive basement dig-outs are done to avoid incurring the excessive stamp duty if purchasing a larger home. Whilst many High Street retailers are now paying more in business rates than they do in rent, which market forces have savagely corrected, the on-line retailers continue to benefit from business rates set at industrial values, despite the fact that they are retailing direct to their customers from their million square foot warehouses. I contend that we can pay off our Covid/Brexit debts, post-crisis, by comprehensive property tax reforms, whilst also correcting unfair anomalies, with the following changes:- Business Rates should be set back to 30% payable of market rental value, and 15% where the premises are vacant. Online retailers should pay a 100% surcharge on their business rates in reflection of the fact that they are retailing, not warehousing, from their premises. Stamp Duty should be returned to 1% for UK homebuyers, and 2% for non- resident investor owners and commercial properties. Council Tax bands should be abolished and replaced with Primary Residence Tax (PRT), levied at 1% per annum after mortgage off-set. The tax should be capped at £2 million net value, except for non-resident investor owners who should pay at 2% and on full value. Second homes should also pay at 2%, but after mortgage offset. As this will be a significant change, there will need to be some discounts and reliefs as follows: 25% discount for single occupiers and pensioners For homeowners whose properties have inflated substantially, but whose income has not kept pace and payment of the tax would cause hardship, there should be a means tested PRT Deferral Scheme, whereby the annual tax is deferred and paid on the sale of the property by the owner or beneficiaries, subject to a 5% charge to fund the scheme. Variable VAT rates should be introduced on retail sales – at 25% for on-line transactions; 15% on High Street sales; and 20% for on-line sales, when collected in-store. A windfall tax should be levied on all businesses, where profits have been turbo- charged as a consequence of the pandemic crisis and the lockdowns, which have so severely damaged most mainstream businesses. The UK housing stock has a reported value of £7.4 trillion , with mortgage debt circa £1.4 trillion . With a taxable base of say £6 trillion , after discount concessions as above, a Covid/Brexit debt circa £500 billion could be paid off within a decade or so by the PRT revenues. Surpluses thereafter could be applied to fund fully restored Local Authority services and major national infrastructure projects. Finally, the UK government and others should sue the Chinese government for reparations for the damages suffered, as a consequence of their cover up, obfuscations over the devastating nature of the Coronavirus, and their initial denials of its human to human transmission.