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Rent Review in the Prevailing Climate
Investment is about becoming financially better off. Investing in commercial property can be rewarding provided you know what you’re doing, otherwise risky. For further reading, please visit LandlordZone newsletter issue 6 - click here
VAT and storage
"As from 1 October 2012, the VAT exemption for storage facilities was withdrawn on a blanket basis and VAT will automatically be payable on rent even if the option to tax has not been exercised.
VAT Information Sheet 10/13 was published on 9 August 2013 and clarified what was intended by the changes which came in on 1 October 2012. The IS states that the new rules apply to suppliers of “any facility which is used, or could potentially be used, by their customers for the storage of goods and customers who rent facilities to store goods”.
The IS clarifies that the changes do not just apply to “self-storage”, which could be narrowly defined as storage just by the end user, but storage by either the supply recipient (customer) or a third party with the customer`s permission if not under a separate supply (for VAT purpose).
The law refers to “facilities for the self-storage of goods” but the guidance states that the changes are not restricted to the type of storage where a small area within a dedicated building is rented by an individual to store their own personal property. The self-storage of goods, therefore, means any storage of goods by an end user.
Storage use includes physical storage, regardless of the supplier’s intention or any agreement between the parties, or storage implicitly intended from the nature of the premises, or commercial documentation in the absence of other actual use. If premises are used for more than one purpose, the rules on multiple and composite supplies will apply and there are examples contained in the IS.
The ramification for landlords is that, as the supplier of premises, they need to monitor the use to which the leased premises are put. Premises which are exempt from VAT in the normal case (and in respect of which no VAT election has been made) will become chargeable automatically for VAT in the event that the tenant, or a third party with the tenant’s permission, uses the whole or part of the premises for storage.
As is often the case, an absentee or institutional landlord will not know how the tenant is using the premises or permitting their use. The IS recommends that the landlord obtains and retains written confirmation of the use from the tenant. It will be necessary, in future, for all leases to contain a requirement for the tenant to supply such information, so that the landlord can comply with the law.
Where premises are sub-let, the head landlord will not need to charge VAT (in the absence of an election) but the intermediate landlord may need to begin to charge VAT if the sub-tenant or a third party with the sub-tenant’s consent (not a separate sub-underlessee or sub-licensee) begins to use the premises for storage. "
VAT Information Sheet 10/13 was published on 9 August 2013 and clarified what was intended by the changes which came in on 1 October 2012. The IS states that the new rules apply to suppliers of “any facility which is used, or could potentially be used, by their customers for the storage of goods and customers who rent facilities to store goods”.
The IS clarifies that the changes do not just apply to “self-storage”, which could be narrowly defined as storage just by the end user, but storage by either the supply recipient (customer) or a third party with the customer`s permission if not under a separate supply (for VAT purpose).
The law refers to “facilities for the self-storage of goods” but the guidance states that the changes are not restricted to the type of storage where a small area within a dedicated building is rented by an individual to store their own personal property. The self-storage of goods, therefore, means any storage of goods by an end user.
Storage use includes physical storage, regardless of the supplier’s intention or any agreement between the parties, or storage implicitly intended from the nature of the premises, or commercial documentation in the absence of other actual use. If premises are used for more than one purpose, the rules on multiple and composite supplies will apply and there are examples contained in the IS.
The ramification for landlords is that, as the supplier of premises, they need to monitor the use to which the leased premises are put. Premises which are exempt from VAT in the normal case (and in respect of which no VAT election has been made) will become chargeable automatically for VAT in the event that the tenant, or a third party with the tenant’s permission, uses the whole or part of the premises for storage.
As is often the case, an absentee or institutional landlord will not know how the tenant is using the premises or permitting their use. The IS recommends that the landlord obtains and retains written confirmation of the use from the tenant. It will be necessary, in future, for all leases to contain a requirement for the tenant to supply such information, so that the landlord can comply with the law.
Where premises are sub-let, the head landlord will not need to charge VAT (in the absence of an election) but the intermediate landlord may need to begin to charge VAT if the sub-tenant or a third party with the sub-tenant’s consent (not a separate sub-underlessee or sub-licensee) begins to use the premises for storage. "
High Street carnage
All this carnage on the High St must be causing problems for internet companies - where are people going to go in the future to look at stuff before they buy it?
'Readiness for Sale' - A Guide for Streamlining Commercial Property Transactions
“In 1995, a working party was set up by the Investment Property Forum (IPF) to consider existing procedures for the acquisition and disposal of real estate and to recommend improvements that would speed up the sale and purchase disposal process. The consultation led to the publication of ‘Readiness for Sale’ in 1996.
16 years on, property in the UK continues to represent, approximately 7%-8% of the total investment market (by value). Liquidity remains an issue exacerbated by the cost and time involved in undertaking transactions and it is clear that ensuring a property is ‘ready for sale’ is even more crucial in challenging economic times as prices are often renegotiated and funders become increasingly selective on assets and their sponsors. Against this background and the increasing use of technology and corporate wrappers, the IPF decided to review the 1996 publication and constituted a new Working Group in 2011. The second edition of 'Readiness for Sale' was published in May 2012. "
16 years on, property in the UK continues to represent, approximately 7%-8% of the total investment market (by value). Liquidity remains an issue exacerbated by the cost and time involved in undertaking transactions and it is clear that ensuring a property is ‘ready for sale’ is even more crucial in challenging economic times as prices are often renegotiated and funders become increasingly selective on assets and their sponsors. Against this background and the increasing use of technology and corporate wrappers, the IPF decided to review the 1996 publication and constituted a new Working Group in 2011. The second edition of 'Readiness for Sale' was published in May 2012. "