Businesses ‘quaking in their boots’ over historic business rates rise

Businesses are “quaking in their boots” over a £3bn leap in business rates bills, according to property industry specialists.

The hike is likely to be the largest annual jump since 1991 following the announcement earlier today that inflation hit 10.1% in September.

The tax on all commercial properties rises in line with the inflation data for September.

Jerry Schurder, business rates policy lead at property advisor Gerald Eve said: “The last time that the Uniform Business Rates had to increase by as much as 10.1% was in 1991 when it rose by 10.9%.

“Businesses are quaking in their boots at the risk of the new Chancellor forcing up business rates in line with inflation – which would add another £3bn per annum to already unaffordable costs.

“In the last two Autumn Budgets, the then Chancellor, Rishi Sunak, froze the UBR at its current level of 49.9p per pound of each property’s Rateable Value assessment – but the loss of revenue to the Exchequer was relatively modest as inflation was running at 0.5% in September 2020 and 3.1% in 2021.

“The Prime Minister claims that her policies are designed for ‘growth, growth and growth’ but further business failures and shop closures will result unless the UBR is frozen again.”

Furthermore, says Schurder, an additional £1.7bn hit to over 250,000 businesses in the retail, leisure and hospitality sectors is on the way unless the existing 50% discount for those businesses is extended.

The recently ousted Chancellor, Kwasi Kwarteng, eschewed the opportunity in his mini-Budget to announce any business rates support.

Schurder added: “Businesses are dependent on the new Chancellor stepping up to the plate and immediately announcing a UBR freeze.

“Huge business rates hikes are not the way to grow our economy and attract inward investment.”

Paul Bassi, chief executive of Real Estate Investors plc, based in Colmore Row, Birmingham, said: “The rise in interest rates is no surprise and hopefully it is beginning to flatline.

“Interest rate rises are inevitable. The Bank of England has utterly failed in its key objective of keeping inflation at 2%!”

Gurpreet Bassi, chief executive of Birmingham-based commercial property agency and auctions specialist Bond Wolfe, said: “Auctions have continued to perform relatively well despite economic fluctuations as property investors tend to look at the medium to long term.

“On the residential front, with private house sales taking longer to complete, and mortgage providers down valuing in some cases, auctions provide a more certain route to market.

“If the property sells on or over the asking price, then completion is generally within 28 days.

“We are also seeing evidence of buy-to-let landlords looking to divest themselves of some or all of their portfolio, and this will be reflected in our next auction on Thursday 27 October and future auctions into 2023.”