It was parcelled up as a gift but in fact the government is quietly pulling the wool over the eyes of business safe in the knowledge that businesses have no vote.
It is not going to get any headlines in the national papers and in fact most people won’t even notice it some may even think so what but the Government’s decision to delay the 2015 business rates revaluation is going to cost us an awful lot of money in the long run.
Property experts across the board are spitting tintacks over it: some even calling it nothing short of a scandal.
John Webber, head of rating at Colliers, said cancelling the revaluation, whereby business rates would have been based on values at 2013, is nothing short of a scandal.
“The Government is trying to position delaying a revaluation of business rates as a bonus for businesses but the opposite couldn’t be more true,” he said.
“Many businesses and retailers in hard pressed areas of the country have been eagerly awaiting the five yearly revaluation, due to happen next year. Current business rates are based on 2008 rental values, which are much higher than current figures.”
Webber said rental values for many businesses have plummeted over the last four years. Retail rental values in Kidderminster, between 2008- 2012, for example, have fallen by 25 – 30 per cent. In comparison, Bond Street’s 2008 – 2012 retail rental values have increased by 50 per cent on average.
“A revaluation would have been welcome for pretty much anywhere other than Bond Street in London,” he said.
“Basically, the Government knows that at the 2015 revaluation a huge proportion of businesses would have had a very real expectation of a fall in their rateable values. I think you can draw your own conclusion as to where this government sees its priorities.
The government has delayed the 2015 Rating Revaluation until 2017 on the grounds that it wants to avoid sharp rises in business rate bills for local businesses, and that a delay will deliver tax stability seen as vital to business growth and to help improve the economy.
Businesses are currently paying rates based on the last revaluation which took place before the recession. The tax is meant to be progressive with the charge being dictated by the level of rent passing on the property. However, the gap between the rent today and the rates has continued to widen in most parts of the country.
This is particularly the case outside London where there have been little to no signs of economic recovery. The rating revaluation would have addressed this and finally realigned the tax with the current rental market.
While the majority of fear is for local retailers this doesn’t mean that occupiers of warehouses are immune. There is a resurgence of rent levels in the market but they will still be for the most part short of anything recorded in 2008
Contributing Editor, Property