Enterprise zones – a good move?
25th March, 2015
Is locating in an enterprise zone the ideal solution for a fast-growing business?
The new-style enterprise zones were brought in by the Government in 2012 as a way of stimulating investment and the local economies in selected areas across the country.
There are currently 24 enterprise zones in the UK, including four in Yorkshire and Humberside – the Sheffield City Region Enterprise Zone, the Leeds City Region Enterprise Zone at Aire Valley, the Humber Renewable Energy Cluster and the Humber Green Port Corridor.
The Government outlines a series of benefits for companies who base their businesses at enterprise zones. These include:
- Up to 100% business rate discount worth up to £275,000 per business over a 5 year period
- Simplified local authority planning, for example, through Local Development Orders that grant automatic planning permission for certain development (such as new industrial buildings or changing how existing buildings are used) within specified areas
- Government support to ensure that superfast broadband is rolled out throughout the zone, and, if necessary, public funding
The Government has also extended the deadline so that any business which relocates to an enterprise zone before March 2018 will be able to get the full five years’ worth of business rate discounts.
Certain enterprise zones also allow 100% tax relief for businesses making large investments in plant and machinery.
It sounds like a decent deal for companies, so should you think about basing your business at an enterprise zone?
There are a couple of key factors which you should immediately take into consideration when making such a decision.
First of all, as well as aiming to help stimulate the local economy, enterprise zones are also designed to foster growth in certain business sectors.
For example, the Humber Renewable Energy Super Cluster Enterprise Zone is focused on agrifood, energy, retail & logistics and transport while the Leeds City Region Enterprise Zone is centred on business services, energy, pharmaceuticals and healthcare.
If your business operates in the sectors covered by a specific enterprise zone, locating your company at that zone could help you when recruiting additional staff and may help to foster collaborations with fellow companies in your industry.
On the other hand, if your business is in a completely different sector then you won’t be able to access these benefits.
In a similar vein, if an enterprise zone operates in exactly your sector but is located some distance from key suppliers or customers, you will have to weigh up those opposing factors before making your move.
Another thing to consider is the fact that enterprise zones tend to be located on previously undeveloped sites so you need to take a good look at the state of the zone infrastructure – are the link roads and access routes already in place? Are the groundworks in? Will you be able to hit the ground running as soon as you move in?
At Ward Hadaway, we are advising a strategic landowner on their involvement with the development of an enterprise zone so we know from experience how important these factors are to unlock the economic potential of an area and to persuade businesses to move in.
Of course, one of the advantages of moving to a new site is that you may have a greater opportunity to expand your premises in line with the growth of your business than could be the case in more established locations. There may also be more scope to create bespoke buildings suited to your particular requirements.
Enterprise zones are also the focus of a lot of investment and attention from Local Enterprise Partnerships, local authorities and developers so there is the potential for your business to benefit from this activity and exposure.
There is no doubt that enterprise zones represent an interesting and potentially very useful addition to the property options available to businesses.
However, whether you choose to locate at one of these zones or decide to look elsewhere, you will still need to look at fundamentals such as whether to buy or lease a property, the terms on which you move in to the property, how flexible your occupation is and how all this fits in with your company’s operational and financial requirements.
Sound professional advice from experienced legal advisors can help with all of these issues – and save you valuable time to concentrate on growing your business.
* This article first appeared in a supplement on the Yorkshire Fastest 50 Awards 2015.
Please note that this briefing is designed to be informative, not advisory and represents our understanding of English law and practice as at the date indicated. We would always recommend that you should seek specific guidance on any particular legal issue.
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