Birmingham property rentals have become increasingly divorced
from reality, according to business rescue, recovery and
restructuring specialists Begbies Traynor.
Unless landlords start fully adjusting to the new market place
then the number of vacant offices will grow, with the crisis
getting worse, not better, the firm warns.
John Kelly, regional managing partner at the firm's Birmingham
office, said landlords had got the message on empty properties, but
the penny had yet to drop when it concerned existing tenants
desperately struggling for survival.
He cautioned: "Some of the rentals in central Birmingham had got
increasingly out of line - £30-plus per square foot is
difficult to sustain.
"Rentals are now being lowered across the city centre. Where
there are empty properties landlords are getting the message -
there are a lot of deals available.
"But that is not happening with hard-pressed existing tenants.
Property companies need to nurse them through. If they won't do
that, if they refuse to offer concessions, then more companies will
go bust and that will create more empty properties.
"Surely it is better to agree a reduced rent that keeps money
rolling rather than risk ending up with nothing at all.
"Reality needs to dawn. There is a tenant/landlord/bank
relationship in all this, there has to be discussion, and everyone
needs to be realistic."
Mr Kelly said a failure to come to terms with the new world
order would prove costly for landlords following the Government's
controversial shake-up of empty property relief - it refused to
back down, agreeing only minimal changes, despite howls of protest
from the sector.
"I can understand why the Government brought it in - it was
designed to encourage landlords to let properties rather than leave
them empty. The original concept was sound, but the timing was
disastrous.
"Empty property tax arrived before the recession had fully
bitten. It is an additional burden for a very distressed sector
which it can ill afford."
Mr Kelly urged the Government to think again, and at least
consider some sort of temporary suspension.