Working From Home - Impacts of Coronavirus

[coppice]

Here in the UK retail has been struggling for years now; both commercial rent and business rates (property tax) are still set at levels which reflect how profitable retail space used to be. They've not been reduced in proportion to the actual profit that a given retail site can now be expected to generate.

Unfortunately that means there are a lot of retail spaces becoming (and, crucially, remaining) vacant. The law of supply and demand might mean that commercial rent will come down in time, but that doesn't really apply to taxes.

In the UK retail has several elements in conflict with each other. A key one is that retail parks around the edge of towns have been sucking customers out of city centre retail locations for decades. Now people tend to just focus on the effects of on-line purchases, but retail has been evolving, with changing winners and losers, since cities began.

[coppice]

Corner shops were already residential - they are basically homes with a shop in the front room, except where they used to be like that and got refurbished as mini-supermarkets.

Most corner shops in the UK were built to be corner shops, zoned and taxed as such. The shopkeeper frequently lived above and/or behind the shop. Again this was frequently planned into the design of the building, which often doesn't have a security barrier between the shop area and the home area. There are, however, quite a lot where the shop and the accommodation were built to be used as completely separate entities. I think those are mostly later built ones, where the shop keeper could make enough money to be living in a nicer area. Now that the entire building is residential its usually easy to see from the facade what its origins were, as they tend to do these conversions at minimal cost.

[EEVblog]

I don't think he implied the government would just take them. The landlords likely wouldn't care where their rent comes from so long as it's comparable, and the reason many commercial properties aren't luxury abodes is down to zoning rules. Relax those, let the rich gits live in the city centers and that frees up affordable housing away from town.

Or probably not, but the government can induce change-of-use without actually wrenching properties from their owners.

Commercial rents are really high, so owners are not going to repurpose property as residential unless they have lost all hope of revitalising some kind of commercial use. Where owners have really lost hope for commercial use of their property it has already become residential. For example, most of the traditional corner shops, pubs and many churches in the UK are now someone's home.

Unless it's a standalone commercial property on it's own land with a single owner, it will be strata owned (at least that's how it works here). And it's almost against strata policy for anyone to live in a commercial premises. So even if the government wanted to pay it would require the majority of the strata committee to agree. And as you say, most owners are not going to give up long term commercial rental gain for short term rent. And once people start living in it then "there goes the neighborhood" so to speak.

[EEVblog]

Unfortunately that means there are a lot of retail spaces becoming (and, crucially, remaining) vacant. The law of supply and demand might mean that commercial rent will come down in time, but that doesn't really apply to taxes.

People who own commercial property usually have a very long term outlook on things. Going without rent for 6 month to a year between tenants is not uncommon. This is why most commercial owners want the longest lease possible.

[nctnico]

Unfortunately that means there are a lot of retail spaces becoming (and, crucially, remaining) vacant. The law of supply and demand might mean that commercial rent will come down in time, but that doesn't really apply to taxes.

People who own commercial property usually have a very long term outlook on things. Going without rent for 6 month to a year between tenants is not uncommon. This is why most commercial owners want the longest lease possible.

But in the end you'll need tenants. Over here online shopping is killing retail and the Corona crisis has accellerated that. Many older people who used to go to shops are now shopping online and it remains to be seen whether they will be going back to the shops now they found out about online shopping (which usually has a much much wider choice compared to a shop).

[bd139]

Don't confuse commercial property with retail property. Totally different markets. The latter is a shit show and always has been. The last 6 months have really killed it dead though. Commercial property is very different and still in massive demand.

[coppice]

But in the end you'll need tenants. Over here online shopping is killing retail and the Corona crisis has accellerated that. Many older people who used to go to shops are now shopping online and it remains to be seen whether they will be going back to the shops now they found out about online shopping (which usually has a much much wider choice compared to a shop).

In the 80s every new supermarket in the UK was huge, and it usually caused 2 or 3 smaller supermarkets in the area to close. My uncle fitted out point of sale systems in those places, and it seemed every time I saw him they had just done another store with more checkouts than anything before it. Now the big supermarket chains all operate a network of mini-supermarkets alongside their massive ones. A lot of retail patterns are fashion based and go around in circles. Right now there are still enough shops to go an see a product before buying it on line. When enough shops have been killed, maybe people will see greater value in stores again. I mostly buy products I'm pretty familiar with on line. I want to see and touch most other things.

[tom66]

I haven't rented a commercial property, so don't know who pays what. Does the rent cover taxes (in which case it's not such a good deal for the landlord) or does the tenant pay the rates and the landlord just creams off megabucks for zero effort?

In the UK, the tenant pretty much exclusively pays taxes; residential or commercial.  There are rate relief schemes for certain tenants, so for instance non-profits pay lower business rates, but generally speaking they are based on property value.

I think if landlords had to pay this tax then suddenly there would be huge pressure to reduce it!

[bd139]

But in the end you'll need tenants. Over here online shopping is killing retail and the Corona crisis has accellerated that. Many older people who used to go to shops are now shopping online and it remains to be seen whether they will be going back to the shops now they found out about online shopping (which usually has a much much wider choice compared to a shop).

In the 80s every new supermarket in the UK was huge, and it usually caused 2 or 3 smaller supermarkets in the area to close. My uncle fitted out point of sale systems in those places, and it seemed every time I saw him they had just done another store with more checkouts than anything before it. Now the big supermarket chains all operate a network of mini-supermarkets alongside their massive ones. A lot of retail patterns are fashion based and go around in circles. Right now there are still enough shops to go an see a product before buying it on line. When enough shops have been killed, maybe people will see greater value in stores again. I mostly buy products I'm pretty familiar with on line. I want to see and touch most other things.

I want to get them delivered, see them and touch them, then send them back if they're a pile of crap. And that's what I've been doing for ages without incurring parking fees, travel fees and diseased folk. 

[Zero999]

Here in the UK retail has been struggling for years now; both commercial rent and business rates (property tax) are still set at levels which reflect how profitable retail space used to be. They've not been reduced in proportion to the actual profit that a given retail site can now be expected to generate.

Unfortunately that means there are a lot of retail spaces becoming (and, crucially, remaining) vacant. The law of supply and demand might mean that commercial rent will come down in time, but that doesn't really apply to taxes.

In the UK retail has several elements in conflict with each other. A key one is that retail parks around the edge of towns have been sucking customers out of city centre retail locations for decades. Now people tend to just focus on the effects of on-line purchases, but retail has been evolving, with changing winners and losers, since cities began.

Technology has being driving that change. Everyone getting cars was responsible for the migration of retail out of towns and cities and now we have the Internet which is driving bricks and mortor retail out of business. We'll keep food retail, as most people still prefer to physically buy it, but it'll be more from smaller shops, in town, than superstores.

We have a housing shortage, so why not convert those empty shops to homes?

Because someone owns those shops, it's commercial property, it does not belong to the government.
That's like saying my old lab that I own is currently vacant, so the government can just come and take it and give it to someone. Err, nope.

It's odd how everyone thinks everything in other countries is the same, as where they live. . .

Many of the shops in the UK are owned by the councils and could easily be converted into residential. The government spends lots of money to house people in private properties, so a lot of money could be saved by converting empty shops, to homes for those who desperately need them.

And if you leave your property for too long, the government can come and get it and sell it to someone else. You will receive some money for it, but probably not much. https://www.birmingham.gov.uk/news/article/508/council_seizes_seven_empty_properties

[james_s]

It's odd how everyone thinks everything in other countries is the same, as where they live. . .

Many of the shops in the UK are owned by the councils and could easily be converted into residential. The government spends lots of money to house people in private properties, so a lot of money could be saved by converting empty shops, to homes for those who desperately need them.

It's not really that odd, people base their perspective on whatever they're familiar with.

One of the problems with the proposal at least where I am is that a substantial portion of the homeless population are drug addicts and/or mentally ill. Just give them a place to live and it will quickly be trashed and become a hot spot for drug use and crime, nobody wants to live next door to that and for valid reasons. Neighboring businesses will soon leave as crime rages and drives away customers and you get a cascading effect. Many of the people who desperately need a place to live also desperately need help with their illness/addiction.

[themadhippy]

And if you leave your property for too long, the government can come and get it and sell it to someone else

but its fine to leave your holiday home empty for months whilst the locals are priced out of the market

[coppice]

Here in the UK retail has been struggling for years now; both commercial rent and business rates (property tax) are still set at levels which reflect how profitable retail space used to be. They've not been reduced in proportion to the actual profit that a given retail site can now be expected to generate.

Unfortunately that means there are a lot of retail spaces becoming (and, crucially, remaining) vacant. The law of supply and demand might mean that commercial rent will come down in time, but that doesn't really apply to taxes.

In the UK retail has several elements in conflict with each other. A key one is that retail parks around the edge of towns have been sucking customers out of city centre retail locations for decades. Now people tend to just focus on the effects of on-line purchases, but retail has been evolving, with changing winners and losers, since cities began.

Technology has being driving that change. Everyone getting cars was responsible for the migration of retail out of towns and cities and now we have the Internet which is driving bricks and mortor retail out of business. We'll keep food retail, as most people still prefer to physically buy it, but it'll be more from smaller shops, in town, than superstores.

Sure, but what comes next? There's always something coming next, and people never see it coming or what its consequences will be. They just explain post hoc with the attitude that it was always obvious. 

[coppice]

And if you leave your property for too long, the government can come and get it and sell it to someone else

but its fine to leave your holiday home empty for months whilst the locals are priced out of the market

I wonder how much a personal holiday home brings into the local community, versus a holiday home owned by the locals that is rented out? The large number of people passing through the rented out home suggests they have the bigger financial impact. However, the personally owned home brings in property tax from outside, and will see some erratic use throughout the year. I think most of the rented out homes are completely dead for several months a year. Its complex.

[bd139]

And if you leave your property for too long, the government can come and get it and sell it to someone else

but its fine to leave your holiday home empty for months whilst the locals are priced out of the market

I wonder how much a personal holiday home brings into the local community, versus a holiday home owned by the locals that is rented out? The large number of people passing through the rented out home suggests they have the bigger financial impact. However, the personally owned home brings in property tax from outside, and will see some erratic use throughout the year. I think most of the rented out homes are completely dead for several months a year. Its complex.

This one is interesting as I'm about to buy one.

I'm not taking anything from the local economy in the short term. I am bringing tourist income as I intend to rent it out peak season and occasionally crash in it myself when I want to go hiking etc. I am paying council tax for a property which will have low service impact on schools, refuse collection etc. I'm not polluting. I'll end up living in it when I retire. Is that a problem? 

The locals are priced out of the market only because the ancestors of the locals sold off their entire local industry to make some coin rather than looked at the long term. Now it's fungible service roles which command a low price because anyone can do the work. Do I owe them anything?

[nctnico]

Don't confuse commercial property with retail property. Totally different markets. The latter is a shit show and always has been. The last 6 months have really killed it dead though. Commercial property is very different and still in massive demand.

I wouldn't be so sure about that either. Recently I spoke someone who works at a big bank. When I asked how long she had to work from home her answer was 'indefinitely'. She wasn't laid off but the bank has seen the positive sides of working from home and is now downsizing the amount of office space.

[bd139]

Yeah that's the same here but they tend to convert offices into housing here. Retail is slightly different. A lot of the retail outlets are mixed purpose and leasehold here which means changing purpose is harder and most of the buildings aren't built to fire regulations required for housing.

We're probably only going to have skeleton office after this too and lease the rest of the building out.

[nctnico]

But in the end you'll need tenants. Over here online shopping is killing retail and the Corona crisis has accellerated that. Many older people who used to go to shops are now shopping online and it remains to be seen whether they will be going back to the shops now they found out about online shopping (which usually has a much much wider choice compared to a shop).

In the 80s every new supermarket in the UK was huge, and it usually caused 2 or 3 smaller supermarkets in the area to close. My uncle fitted out point of sale systems in those places, and it seemed every time I saw him they had just done another store with more checkouts than anything before it. Now the big supermarket chains all operate a network of mini-supermarkets alongside their massive ones. A lot of retail patterns are fashion based and go around in circles. Right now there are still enough shops to go an see a product before buying it on line. When enough shops have been killed, maybe people will see greater value in stores again.

The problem is that shops don't have a wide variety; they mostly carry generic stuff. I basically stopped visiting shops because I left empty handed too many times. When I buy clothes I usually start with a selection of 5000 to 7000 items (shirts for example). That gets reduced to a short list of 20 from which I order 6 and keep 2 or 3.

[nctnico]

We have a housing shortage, so why not convert those empty shops to homes?

Because someone owns those shops, it's commercial property, it does not belong to the government.
That's like saying my old lab that I own is currently vacant, so the government can just come and take it and give it to someone. Err, nope.

No, but the government can invent a tax for empty offices which then makes the choice for the owner to convert it to homes 'easier'.

[themadhippy]

The holiday homes i meen are those that get used for a long weekend between trips to the skiing chalet and taking the yacht down to the monaco, that are exempt from council tax and sit empty for most of the year.As for converting town center property into housing,fine,but dont start complaining  when the long established  town center business is keeping you awake at midnight.

[Zero999]

It's odd how everyone thinks everything in other countries is the same, as where they live. . .

Many of the shops in the UK are owned by the councils and could easily be converted into residential. The government spends lots of money to house people in private properties, so a lot of money could be saved by converting empty shops, to homes for those who desperately need them.

It's not really that odd, people base their perspective on whatever they're familiar with.

One of the problems with the proposal at least where I am is that a substantial portion of the homeless population are drug addicts and/or mentally ill. Just give them a place to live and it will quickly be trashed and become a hot spot for drug use and crime, nobody wants to live next door to that and for valid reasons. Neighboring businesses will soon leave as crime rages and drives away customers and you get a cascading effect. Many of the people who desperately need a place to live also desperately need help with their illness/addiction.

Yes that's true for some homeless people, especially those who live on the street, but it's more often not the case. Quite often there are homeless people who don't live on the street, but their housing conditions/living arrangements are poor. They might float from different friends/relatives houses, or live in an overcrowded property. That might not be too bad for single people, but it's quite bad for children. It's also bad for a couple with a young family to be living with their parents, especially with COVID-19 around.

[james_s]

The problem is that shops don't have a wide variety; they mostly carry generic stuff. I basically stopped visiting shops because I left empty handed too many times. When I buy clothes I usually start with a selection of 5000 to 7000 items (shirts for example). That gets reduced to a short list of 20 from which I order 6 and keep 2 or 3.

I still shop locally occasionally, it's nice when I want something NOW or when I'm getting things like produce or lumber where I want to pick through the pile and select exactly the items I want. I've gotten fed up on many occasions though when a store doesn't have what I want in stock and their response is they can order it for me. If I wanted to order it I could do that at home instead of driving to the store and then driving back again to collect the item when it comes in.

[GeorgeOfTheJungle]

I still shop locally occasionally, it's nice when I want something NOW or when I'm getting things like produce or lumber where I want to pick through the pile and select exactly the items I want. I've gotten fed up on many occasions though when a store doesn't have what I want in stock and their response is they can order it for me. If I wanted to order it I could do that at home instead of driving to the store and then driving back again to collect the item when it comes in.

Yep, we're digging our own grave.

[paulca]

This one is interesting as I'm about to buy one.

Buy to let is exactly the issue.  Has been for a while and it's got quite serious.  It's nothing more than landlords buying up all the properties and then renting them back out at twice (or higher) the mortgagable rate to make profit.

I just moved from a 2 bed apartment in a 3 apartment/3 shop complex paying £600 a month, to a full 3 bed semi-detached house with front and rear gardens and drive/garage.... Mortgage + rates = £550 a month.

But those on lesser income will not get a mortgage so they get stuck paying higher and higher rents.  Calls to regulate the landlord business to cap rents and force landlords to provide "quality of service" and "minimal living standards" in their properties, was voted out in parliament.  Everyone of the Tories who voted against it... you guessed it... have multiple properties to let.  No conflict of interest at all.  I want that vote taken again, but anyone who has a for-let property be banned from voting.

With the UK crawling further and further into bed with the US and with Brexit removing very rapidly our human rights bill and employement rights this will just get worse.  When the employement rights go getting a mortgage will become much, much harder, so only the affluent will have the capital to leverage a mortgage, meaning the rich will own all the property and the poor will pay rent and jump to their landlords whim.

[SerieZ]

This one is interesting as I'm about to buy one.

Buy to let is exactly the issue.  Has been for a while and it's got quite serious.  It's nothing more than landlords buying up all the properties and then renting them back out at twice (or higher) the mortgagable rate to make profit.

I just moved from a 2 bed apartment in a 3 apartment/3 shop complex paying £600 a month, to a full 3 bed semi-detached house with front and rear gardens and drive/garage.... Mortgage + rates = £550 a month.

But those on lesser income will not get a mortgage so they get stuck paying higher and higher rents.  Calls to regulate the landlord business to cap rents and force landlords to provide "quality of service" and "minimal living standards" in their properties, was voted out in parliament.  Everyone of the Tories who voted against it... you guessed it... have multiple properties to let.  No conflict of interest at all.  I want that vote taken again, but anyone who has a for-let property be banned from voting.

With the UK crawling further and further into bed with the US and with Brexit removing very rapidly our human rights bill and employement rights this will just get worse.  When the employement rights go getting a mortgage will become much, much harder, so only the affluent will have the capital to leverage a mortgage, meaning the rich will own all the property and the poor will pay rent and jump to their landlords whim.

Evil landlords want to get us back to Feudalism!!! EU - save us!!!
Look, I understand your grievance but you should listen to yourself and maybe read some other sources as well before typing such hyperbolic blanket statements.
The Housing Market is already over regulated in most places including Switzerland and that is the main reason for unhappy renters AND Landlords.
That, the broken competition via regulation and the massive Influx of people to hotspots i.e major Cities natural and artificial produces places with quite unaffordable rent.
Berlin is a placed where I lived for a few years which exemplified this Problem and they had a Left, Far Left and Greens in Power for years  (almost 20 now) and they only managed to make it worse for everyone involved.

And No - I am not renting out Property.