Wolverhampton’s retail recovery is being hampered by the Government’s decision to postpone the revaluation of business rates.
The city is one of 27 towns and cities across the UK chosen to lead the recovery of country’s ailing high streets as part of the Portas Pilot scheme, which launched last year. But according to research carried out by property consultants Colliers International and the British Council of Shopping Centres (BCSC), any funding received from the scheme is effectively being wiped out by the business rates retailers are still paying based on rental valuations made in 2008, at the height of the market.
In Wolverhampton, high street rental values have fallen by 27 per cent, from £130 per sq ft to £95 per sq ft, since 2008. In secondary retail areas rental values have been hit even harder.
As part of the Portas Pilot scheme, Wolverhampton received £100,000 from the Government to breath life back into the high street to attract and support new retailing businesses. With the fifth highest level of empty shops in the country, businesses will also be given grants to move into abandoned buildings to trade and showcase their work.
However, Colliers’ research found that of the 15 pilots data is available for, 13 will be worse off as a result of delaying the rates revaluation. The significant fall in rental values in many Portas Pilot towns would have meant dramatically reduced rates at the 2015 revaluation.
At present, business rates are calculated based on the rental valuation in 2008. However, since the credit-crunch and the subsequent impact on the property market, values have dropped by as much as 40 per cent in some towns and cities, meaning many retailers and businesses are paying rates disproportionate to the value of their property.
John Webber, director and head of Colliers International’s national rating team based in Birmingham, said the Government’s decision to not take action on business rates could have a catastrophic effect on the most vulnerable high streets.
“It really does beggars belief,” said Mr Webber. “On the one hand the Government is trying to help and support the high street with extra funding and support through the Portas Pilot and then the other is heaping more pressure on retailers by postponing the rating revaluation until 2017. It flies in the face of all common sense.
“Many retailers were holding out for the 2015 revaluation as their business rates would have probably reduced. Instead they now face five more years of paying higher than market value rates, which is neither helpful nor fair on those businesses that are already struggling.”
Edward Cooke, director of policy and public affairs at BCSC, said: “The Government has really failed to engage on the issue of postponing the revaluation of property with regard to business rates.
“The Chancellor’s refusal to address the impact of business rates rises in the Budget may have signalled the end for many retailers. The impact of government initiatives such as the Portas Pilot is going to be undermined unless there are substantial changes to the business rates regime.”