Retailers in most UK cities will see rateable values fall, as part of the 2017 Business Rates review.
CBRE’s analysis, ahead of the Valuation Office Agency’s publication of proposed values on 30th September, predicts that Aberdeen, Leeds, Cardiff and Bristol will all see their average values decrease by over 30 per cent.
Others, though, would see their rateable value increase, which would mean that their business rates would then rise come 1st April 2017. In Central London, in particular, retailers could see rateable values rise by as much as 170 percent.
The news will come as a boost to regional cities, with the possibility of lower occupancy costs an incentive for retailers to buy away from the UK capital. However, CBRE’s report arrives just after the government set up a consultation for the regulations for the business rates appeals process – the regulations say the Valuation Tribunal will only order an alteration to the rateable value of a business, if it considers it to be ‘outside the bounds of reasonable professional judgement’. Retailers will also have to pay to pursue an appeal for each individual site, increasing the potential overall costs involved.
“With the cumulative rateable value set to fall across the UK, the government will be seeking to maintain the level of tax generated by the business rates system,” says Tim Attridge, Senior Director, Rating at CBRE. “Therefore the multiplier will be higher than we’ve ever seen immediately after a revaluation. Retailers should be aware of what the potential changes might be, and the impact on their business.”
“Yes, there is the option to appeal, but this will be a very protracted process and the definition of ‘reasonable judgement’, is far from clear. If the margin of error is as much as 10 per cent or 20 per cent, for example, retailers will pay considerably more than they might reasonably expect over the five years of the new rating list.”