Revaluation postponement will hit retailers, say agents

PROPERTY agents have lambasted the government’s decision to postpone the next business rates revaluation until 2017, saying it will add more pain to struggling retailers and widen the North-South divide.

A revaluation was due in 2015, linking rates to rents in 2013, but the postponement means companies will have to pay business rates based on rents in 2008 – at the height of the market – until 2017.

The Department for Communities and Local Government said the measure will ensure firms don’t face unexpected hikes in their business rate bills over the next five years. It has been accused of protecting a significant source of income.

Stuart Hicks, rating director at Manchesterproperty consultancy Dunlop Heywood said: “The result of postponing the revaluation is really to prevent the tax base being reset. This would have allowed areas that have suffered as a result of the recession – i.e. secondary retail and geographical areas such as the North West and Yorkshire – benefiting and being supported by lower rateable values.
 
“The other major problem is that 2008 values are artificially high being based on the Valuation Office Agency’s view of peak market values and, if anything, we need to bring the revaluation forward to enable the rating valuations to take account of the massive decline in market rents that we have seen in the majority of the country.”
 
Simon Heathers, head of rating at Sanderson Weatherall in Manchester, said: “The failure of the government to review rates in accordance with the mandatory five yearly timetable would not only be detrimental to those currently paying pre-recession based rates, which in many cases are far too high, it will also serve to widen the North-South divide.

“Those in lucrative locations such as London and the South East, where rental values have increased, will benefit from the move whilst hard hit retailers in Northern cities and elsewhere will continue to be suffocated by being charged business rates based on pre-recession values. The object of a revaluation is to re-assess properties, both upwards and downwards and not to just increase rates bills for all.

“Retailers already face some of the toughest trading conditions in decades and this move will not serve to ‘avoid local firms and local shops facing unexpected hikes in their business rate bills’. In short it will see many businesses continuing to pay far more rates than they should.”