GVA says the relentless criticism of business rates and the government’s handling of the revaluation postponement are proving increasingly unhelpful.
Instead, it is urging Government, and its property peers, to suggest workable solutions to the problem.
New research by the UK’s largest independent commercial property advisor reveals the scale of disparity business rates is presenting different regions around the UK. With business rates currently based on rental values that existed at the peak of the market, some regions or sectors have since experienced rental value declines of up to 40.3%.
Graham Knight, Director at GVA, said: “The property market is wielding a very large stick to try and solve this problem, when a carrot could offer a far more helpful resolution.
“Here in the Midlands, for instance, we would have seen a fall of at least 20 per cent in rateable values for industrial properties, based on deals done in 2013. This is not limited to just industrial properties, however, and it is important to point out that all sectors in the region are suffering.
“Business Rates won’t be replaced because there isn’t a better alternative and dramatic changes to the system would just shift the problem onto someone else. Instead the system needs improving”
GVA wants to see:-
1. The use of the £1 billion savings through deferring the revaluation for two years to freeze rate bill increases (the money coming from government not having to operate a transitional scheme to help those facing big rate bill increases from a revaluation)
2. Possible targeted relief with the government assisting council’s by offering a one year rates holiday for tenant’s taking up vacant units in High Streets and in high vacancy industrial and office locations.
3. Take another look at empty rates and consider a return to pre April 2008 levels for a two year period.
4. Ease the appeal procedures and concentrate Valuation Office Agency resource with a more thorough review of values in locations where there have been large increases in vacancy since 2008.
5. Look closely at creating town centre enterprise zones to offer state aid relief to attract new occupiers and stimulate growth in town centres.
6. Take a really good look at introducing 3 year revaluations to ensure greater consistency between rate liabilities and property rental performance.
GVA’s research highlights that prime property rental values have fallen by over 9% over the past five years. However this does not cover secondary and tertiary which when added to the pot suggests the decline is closer to 20%.
At the regional level there are some marked differences, and it isn’t as simple a problem as a north/south divide.
On prime in London (6.4% decline), the South East and Eastern regions have seen below average declines. Whereas the South West, West Midlands, North West, Yorkshire & Humber, Scotland and Wales have all seen above average declines, the greatest being 15% in Wales.
At a sector level, the differences are even more extreme. Standard retail property at the regional level saw rental growth vary from +8.6% in London to -23.2% in Wales, but there were large differences between central/inner London (+10.5%) and outer London (-10.5%). At the county level Cleveland was worst, with rental values falling 23.2%.
At a local level, Knightsbridge saw the strongest rental growth (+24.4%) and Middlesbrough the worst (-40.3%).
Office rental value growth at the regional level shows a less varied picture than retail. However the four worst affected areas were all in the south – Bracknell, Camberley, Swindon and Bromley with falls of up to 30%.
Industrial rental value growth at the regional, county or local authority level has varied less than the other sectors, but most areas have seen a fall in values over the past five years. Scotland, due to strong growth in Aberdeen (+23.8%), saw only a marginal overall decline of 0.5%. At a local level a number of areas saw single figure growth, and at the other end of the scale, Leicester, Bracknell and Bolton saw values fall between 21 – 24.1%.
