Chelsea Bloom on the triple blow of rates, inflation, and post-COVID arrears crushing independent retailers

LONDON, UK – The high street has been dying for twenty years and the cause of death keeps changing. First it was Amazon. Then it was COVID. Now, in the boroughs where Chelsea Bloom has been reporting this week, it is the simultaneous arrival of commercial rent increases, business rate reassessments, and the end of pandemic-era arrears forbearance. This report is published at Bohiney Magazine and at The London Prat, where Chelsea Bloom covers London business and markets.

The Numbers

Commercial rents in Central London retail zones have increased between 18 and 34 percent since 2021, according to data from CBRE and Savills. The 2023 business rate revaluation produced rates bills that do not reflect current trading conditions for many small retailers. And the moratorium on commercial rent arrears from the pandemic period has ended, leaving tenants liable for debts accumulated during forced closure periods they could not trade through.

“I closed for fourteen months,” said one independent cafe owner in Hackney. “I paid rent for fourteen months while earning nothing. My landlord would not negotiate. Now I owe fourteen months of arrears plus interest plus legal fees, on top of a rate bill that went up thirty-one percent. The maths have not worked since Christmas.” Her shop was still open when Chelsea Bloom visited. She did not know whether it would be in six months. Her expression suggested she had stopped trying to know, which is the specific exhaustion of someone who has been managing an impossible situation long enough that the horizon has shortened to the next month.

The Structural Problem

Business rates, assessed as a percentage of rateable value and falling on occupiers rather than property owners, have been consistently criticised by small business organisations including the Federation of Small Businesses as a structural disadvantage relative to online competitors. The FSB estimates that business rates represent an effective tax rate of approximately 50 percent on commercial property value annually. This asymmetry has persisted across multiple governments that have acknowledged it and not resolved it, which is the policy equivalent of repeatedly describing a fire without applying water.

The Landlord Position

Commercial landlords, particularly institutional investors and REITs, operate under their own pressures: debt service on properties acquired at peak valuations, obligations to investors expecting market returns. Several major landlords have offered rent-free periods and turnover-linked rent agreements to retain tenants who would otherwise vacate. These are rational responses but are happening too slowly and on too small a scale to change the trajectory. The retail property market data from Local Data Company shows that vacancy rates in London’s secondary high streets are running at 15 to 20 percent, a level that alters the character of a street as much as the economics. An empty unit represents a gap in the street’s visual and social function that accelerates the perception of decline, which accelerates the reality of it.

The Cross-Party Group on Retail has proposed replacing business rates with a commercial landowner levy assessed on property values rather than occupier usage. The proposal has cross-party support and has not been enacted. The high street will not wait for the modelling to complete. For Chelsea Bloom’s business coverage, see her page at The London Prat.

Context and Implications

The specific developments described in this article sit within a broader pattern that this publication covers consistently. Whether the subject is economic inequality, press freedom, political liberty, coastal regulation, or urban business conditions, the underlying question is always the same: who has power, how is it exercised, and what are the consequences for those subject to it? Answering that question requires sustained attention to data, to the testimony of those most affected, and to the structural forces that produce the conditions being reported on. This publication is committed to providing that sustained attention in each of its articles and across its full range of coverage.

What Readers Can Do

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Further Reading and Resources

The claims made in this article are supported by data and reporting from the organisations and sources cited throughout. Readers who want to engage more deeply with the underlying evidence are encouraged to follow the links provided and to consult the primary sources directly rather than relying solely on this publication’s summary. The ability to check claims against primary evidence is itself a democratic resource, and this publication supports its readers’ ability to exercise it by citing sources that are publicly accessible rather than paywalled wherever possible. Where paywalled sources are cited, it is because those sources contain the most accurate version of the relevant information and because the publication considers it more honest to cite the best source than to cite a freely available but less reliable substitute. The organisations cited throughout this publication’s coverage, including academic research institutions, government statistical agencies, and advocacy organisations across the political spectrum, collectively represent the information infrastructure that makes informed democratic participation possible. Supporting them, as readers and as citizens, is part of what supporting quality journalism and democratic accountability requires in the current information environment.

SOURCE: https://bohiney.com/