Looking back, May's EU announcement on the expansion of Business Premises Renovation Allowance (BPRA) qualifying areas was heralded with little more than a whimper, writes Stuart Stead. Given the potential opportunity it provides to the region's developers I don't believe enough attention has been given to this valuable tax relief.
By significantly increasing the reach of BPRA, the EU has effectively given the green light for developers to complete or bring forward commercial projects at a vastly reduced cost. Those whose ears have pricked up (can ears prick up whilst reading? I'll save that for a separate discussion) should consider that BPRA delivers 100% tax relief on associated development costs, providing a huge potential saving on any given project.
In terms of the nitty gritty, there are two main criteria required to access the allowance – location and project type.
In the first instance, let us consider the relevant areas that were affected by May's announcement. Manchester was a huge beneficiary. Wards including the city centre, Hulme, Harpurhey, Baguley and Ancoats & Clayton are all now classed as assisted areas, potentially opening up a large proportion of new Manchester developments to BPRA.
Putting Manchester aside, large swathes of the North West are now also benefitting from this expanded footprint including areas of Liverpool, Bolton, Wigan, Blackburn, Lancaster, Burnley and Cheshire. If you're a developer considering or working on projects in relevant wards, you could be looking at a massive reduction in costs. Not only might it help get a stalled scheme moving but it could well inform decisions on the location of future developments.
Secondly, the project in question must fit into three basic criteria, as set out by the government:
1. The development must relate to a building which has stood empty for 12 months before the qualifying expenditure was incurred.
2. The property's previous use must have been for commercial purposes.
3. The building must remain a business premises once the redevelopment is complete.
Whilst there are a selection of other minor stipulations which must be adhered to, the overall basis for claiming is a relatively simple one that can be applied to a variety of sectors from hospitality to office rental.
When also taking into account the relief's 2017 extension date and the ability to claim on expenditure in the same year as the money was spent, it's clear that BPRA could act as a real lifeline for certain projects. Plus there is no doubt, if a developer targets the right kind of development in the right kind of area, it could have a positive long term impact on cash flow. Providing, of course, the claims implementation is handled correctly.
It's fair to say that the EU receives a lot of criticism for its regular intervention into governmental affairs, but in this case they should be applauded for providing a genuine stimulant to the economy. As the North West property market continues to show green shoots of recovery I believe BPRA can assist the pace of this upturn. At the very least it's a helping hand developers can't afford to ignore.
Stuart Stead is partner and head of property and construction at Cowgill Holloway