As property firms across the country prepare their responses to the Department for Communities and Local Government (DCLG) 10th April call for comment on proposed changes to the current rating system, leading local expert Robin Ellis from CBRE in Leeds, considers the likely response.
Mr Ellis explains;
“There has been some criticism of the current rating system, claiming it is not fit for purpose. Volatility in property values since the last revaluation means that often rating assessments appear remote from the level of rents which are paid currently. This is particularly evident in Yorkshire and the North East where rental values have fallen substantially. To compound the problem the appeal system is struggling to cope with the volume of appeals. We are now in the fifth year of the 2010 Rating List and many appeals remain unresolved which means that even where it can be demonstrated that a rating assessment is excessive the ratepayer is having to wait far too long to correct it.”
The Government appears committed to the rating system which nets around £22 bn of revenue for the treasury and has the benefit over other forms of tax of being difficult to avoid and relatively cheap to collect. Responding to criticism, the DCLG issued a paper last December called ‘Checking & Challenging Your Rateable Value’ which proposed a number of changes to the current rating system. The proposed changes include the Valuation Office Agency (VOA) providing more information about how each rating assessment has been derived and, where appeals are made, requiring ratepayers to enclose at the outset detailed evidence to support their challenge. Under the current proposals the VOA could decide that the appeal is invalid or, after a 12 month delay, to issue their decision notice which could simply reject the appeal out of hand. Ratepayers would then have to make a separate appeal to the Valuation Tribunal; effectively a dual appeal system.
Mr Ellis states that the changes are an attempt to reduce the amount of speculative appeals by making the system more transparent but also placing greater burden of proof on the ratepayer. He highlights that concerns have been raised to suggest the changes will add further bureaucracy, and indeed delays, to the process.
The latest consultation paper invites responses for a broader review of the rating system. Responses are required before the deadline of 6th June 2014 and Mr Ellis anticipates that many respondents will voice concerns about the proposed changes, calling for improvements to the current ‘single appeal’ system and a more frequent revaluation cycle.
He explains;
“Far greater transparency and exchange of evidence at an early stage would do much to streamline the appeal process. Unfounded appeals could be weeded out more quickly, allowing genuine appeals to be accelerated.
“Since 1990 there have been revaluations every 5 years. However, the deferral of the next revaluation means that the current Rating List will be in place for 7 years. The delay in the next revaluation following a period of recession is the main reason that the rating system has fallen into disrepute”. Ellis predicts “many stakeholders will argue that a three yearly cycle is more suitable as it is fairer that rating assessments should respond to fluctuations in the property market more quickly”. However, this can only become a reality if the appeal process is simplified.
Ellis predicts that there will be a keen response to the DCLG’s call for comment and he is hopeful that as one of the property industry’s key stakeholders, CBRE’s voice will be heard. He concludes; “By making the right changes, the property market could benefit from a more accurate and straightforward rating and appeals system and we hope that the DCLG takes on board the feedback on the proposed changes.”
