Cadogan, one of central London’s oldest landlords, has revealed a buoyant retail property performance but its chief executive warned the government should rethink the ‘tourist tax’ before it causes “irreversible damage” to the capital.
Hugh Seaborn joins a growing number of business leaders that want to see duty-free shopping reinstated. It was axed in 2021 and had made purchases in the UK 20% cheaper for international visitors.
The latest comments came as Chelsea and Knightsbridge landlord Cadogan published results that show the value of its property portfolio, comprising shops, restaurants, flats and offices, climbed 5.4% in 2022 to £5.1 billion.
Retail makes up the largest part of the estate owned by Cadogan which has an association with Chelsea that began more than 300 years ago.
The company launched marketing campaigns to encourage shoppers back post-Covid and last year saw solid store leasing, total retail rental gross income rise by 7.1% and footfall bounce back.
But Seaborn said there could be challenges ahead for retail owing to the loss of tax-free shopping.
He told the Evening Standard: “We should incentivise travel and ensure cities remain on a level playing field with their European counterparts which are currently performing significantly better. The Government’s current position on VAT-free shopping is clearly detrimental and needs to be addressed before the impact of this visitor tax causes irreversible damage to London.”
He added: “The impact of removing tax-free shopping from thousands of businesses across the country when growth is so desperately needed, cannot be underestimated.”
A HM Treasury spokesman said: “VAT-free shopping does not directly benefit Brits – it allows foreign tourists who buy items in the UK to claim back VAT as they return home.”
The spokesman said there is evidence that shows the key motivators for tourists visiting the UK are its rich history and heritage, and vibrant towns and cities.
While the Cadogan results show retail and residential portfolio values improved, offices declined 4.2%.
Total income increased by 10.4% to £186.5 million. Operating profit before capital items of £98.4 million was down 2.4% as investment increased in major development projects.
Work ahead or underway includes ·a £46 million public realm and urban greening project on Sloane Street and the restoration and conversion of 1 Sloane Gardens from an Edwardian apartment block into a boutique hotel and restaurant.
The firm also pointed to good progress during the year with its commitment to achieve net zero carbon emissions by 2030.
At the aristocratic family-owned landlord a dividend of £76.5m was paid to trust settlements of which the family of Earl Cadogan and a charitable trust are beneficiaries. Over 90% of this dividend was set aside to make provision for 10 yearly inheritance tax liabilities for which the trust settlements are liable.
Seaborn said: “If 2021 was a year of recovery then 2022 was one where we finally emerged from the long shadow of the pandemic and benefited from our carefully targeted support and investment to deliver a robust performance.”
