Mon, Mar 27, 2017
The UK hospitality sector faces a period of instability following the announcement of the proposed business rate increase. Business rates are currently on a rent-based valuation system, which from April 2017, will be reevaluated considering current property prices. As a result, restaurant and pub owners will face a significant increase in business rates, ranging from between 25% and 400% when the new valuations take effect. The worst affected part of the UK is likely to be the South East, where property prices have increased disproportionately over the last seven years.
Following the recent increase in the National Living Wage, along with increases in both training and regulatory expenditure, margins in the sector have come under intense pressure. Consequently, this already challenged sector is likely to see further decline in the face of increasing business rates.
Questions regarding funding and access to capital have never been more critical with increased reliance on lenders anticipated in 2017. Lenders will need to be mindful of the challenges facing the industry and will need to work with their customers to reassess cash flow forecasts to ensure debt serviceability and, where applicable, safeguard against covenants being breached.
Our industry specialists are able to draw upon their depth of understanding of the sector and are experienced in operating in the most challenging environments to assist you and your clients and deliver effective business solutions.
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