Retailers in 11 out of 14 UK cities, including Leeds, will see their average rateable values decrease in the 2017 business rates review, according to analysis from CBRE.
Leeds, Cardiff, Aberdeen and Bristol will all see their average values decrease by more than 30%. CBRE’s analysis shows 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 30th September.
While positive news as a whole, as well an incentive to buy in these cities with reduced occupancy costs, the decrease will not be felt across the board and some retailers are still likely to see an uplift come 1 April 2017.
Nick Marsden, Director of Rating at the Leeds office of CBRE commented:
“Leeds based High Street retailers may finally see a reduction in business rates when values taken at 1st April 2015 come into effect 1st April 2017.
“We have looked at movement in rental values based on actual evidence our transaction teams have collated. Whilst London based retailers are faced with significant increases in rateable values, due to rental movement between April 2008 and April 2015, many regions are expected to see falls, including Leeds.
“The fact that Leeds based High Street retailers will experience a fall in rateable value is particularly good news for the city. This will provide lower occupational costs for occupiers and is a welcome boost to Landlords looking to let vacant space.
“However, any benefit will depend on what, if any transitional adjustments are implemented at revaluation. In order to help businesses adjust to significant increases, those that experience an important decrease may have to help fund this. In addition, with changes to the appeal process, it is therefore essential for retailers to budget accordingly and review their strategy.”
In Central London, rateable values could rise by as much as 170%. Furthermore, the analysis comes shortly after the government established a consultation for the regulations that will underpin the business rates appeals process.
The regulations state that the Valuation Tribunal will only order an alteration to the rateable value of a business if it considers it to be “outside the bounds of reasonable professional judgement”. Retailers will also have to pay to pursue an appeal for each individual site, increasing the potential overall costs involved.
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.”
