Birmingham retailers set to be main losers in business rates review

RETAILERS in Birmingham are set to be the main losers in next year’s business rates review, according to a new study.

The surge in the city’s commercial property sector in the last few years has had the knock-on effect of raising prices and a new study by CBRE suggests the city will be the biggest loser outside of London in the 2017 review, with rates likely to go up by around 9%.

The study as a whole concludes retailers in 11 out of 14 major UK cities will see their average rateable values decrease in the review. The only other city facing a rise is Liverpool (1%).

According to CBRE, Aberdeen, Leeds, Cardiff and Bristol will all see their average values decrease by over 30%.

The reduction in rateable values could act as spur for investors looking to snap up bargains in cities outside Birmingham but it could also spell problems for the second city as it looks to continue attracting new business.

While the city remains the only one in the country outside of London to have the big five department stores and with redevelopment schemes such as The Mailbox and Grand Central, together with that being implemented by Primark at the former Pavilions centre suggesting the current picture is a healthy one, long term concerns remain.    

With the climate staying tough for the sector and the fall-out from the collapse of BHS still being digested, it will be interesting to see if the city can continue to attract new retailers in the way it has recently.

However, if Birmingham retailers think they will have it tough, spare a thought for those in central London where rateable values could rise by as much as 170%.

CBRE’s analysis defines the percentage rateable value movement from 2010 to 2017, ahead of the next rates revaluation and the publication of the proposed values by the Valuation Office Agency on September 30.

Tim Attridge, Senior Director, Rating at CBRE, said: “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. 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% or 20%, for example, retailers will pay considerably more than they might reasonably expect over the five years of the new rating list. With this lack of clarity, the key is for retailers to budget accordingly now, review their strategy and ensure they have sufficient funds in place to either challenge, or adapt to a new system in order to survive.”