Office Space: Rip Off Britain
September 5th, 2007 | by Simon Rattray
Office space in the UK is without question the most expensive in the world. Even in places such as
Birmingham , the costs of renting an office is 40% more than in downtown New
York. This despite construction costs being 50% less.
Why is this so? Well it is probably something to do with the cost of business regulation and planning constraints in the UK.
In The UK there is a disincentive for people to permit commercial construction since business rates for offices are subject to national taxation and not collected locally. As residents control development and their main incentive to allow
development is (fear of) unemployment, not financial gain, they are not as willing to allow building work to take place.
Getting planning permission can be labourious and often fruitless task as the remaining land available steadily decreases.
The one exception to this is the City if London and the
Docklands, which is controlled by the business community and, in this case, has an unmatched fiscal incentive to allow the building of offices. The City is also the only location in
Britain where the RT value has decrease over the years, which is due to the loosening of planning rules and regulations in the 1980s which was triggered by competition from other locations.
Not everyone wants to see an unrelenting urban sprawl, but at the same time it should be recognised the economic benefits that can be drawn from increasing office space capacity such as job creation. It would also lower the costs of renting office space, enticing more business to start or expand. Office brokerage has become a lucrative industry in the UK partly because of inflated costs of renting office space. Lower business taxes has hugely aided the Irish economy to grow faster than the UK economy in recent years. Perhaps we should take a leaf out of their book?
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2 Responses to “Office Space: Rip Off Britain”
By James Welch on Sep 5, 2007 | Reply
Great office space article, Simon. Very impressed.
By Sean Brockbank on Apr 23, 2008 | Reply
Good article Simon and very true.
Small business do get 50% Business rate relief but boy do they need it!
Considering that LA’s have now had the green light to put up planning fees from the 6th April 2008 the situation can only get worse.
How can LA’s and central Governement justify 26.5% increase in planning fees on change of Use applications at a time when our econmy in the UK is floundering?
The service you get is diminishing all the time and the length of determination on applications just gets ever longer from these organisations. I just wish the planning system would get privatised!