From the 1st April 2017 commercial occupiers will start to feel the affects of the new business rates re-valuations, says Haydn Thomas of Hutchings and Thomas Chartered Surveyors, Gold Tops, Newport.
It has been 7 years since the last re-valuation and with the 2008 down turn in the economy it is a factor that most businesses and commercial occupiers outside the south east of the UK have long waited for.
For too long businesses have been expected to shoulder high rates bills which have been set in line with historic rateable values which in themselves were set in more, economically beneficial times.
In the past few days the winners and losers in the rates re-valuation have been announced with Newport seemingly set to see a huge reduction in rateable values and hence rates payable.
For businesses both big and small this will come as a massive boost to their balance sheets with reduction in any overheads being greatly received by businesses even in an improving market.
As previously mentioned previous rateable values were set at the 1st April 2008 and hence prior to the economic down turn and over recent times we have seen the multiplier rise steadily to a current level of 48.6 p in the Pound.
With the general reduction in rateable values across the board we would expect to see a small increase in the multiplier or Uniform Business Rate (UBR) to try and offset any huge reductions in income from the non domestic rating system.
Obviously the rates collected by the billing authorities are paid into a central pool and then re-distributed to County and County Borough Councils and Police Authorities.
The monies paid to local authorities are then spent on the provision of local amenities such as community services, education, social support etc.
It is thought that the UBR will creep towards 50p in the Pound to help offset/balance any potential reductions in this income and sustain public services.
On the flip side it is also hoped that the reduction in rateable values will encourage and assist businesses and not only sustain their trade but potentially increase and expand and hence take up currently vacant properties. This in turn will help landlords and property owners not only by the general reduction in rates but potentially increasing occupier demand.
We would assume that the current relief from business rates for properties with a rateable value of below £12,000 (receiving 100% relief) will continue and potentially with the re-valuation more properties will fall within this bracket which again will be of great benefit to small/ medium businesses.
As previously mentioned there are concerns in some quarters, that the re-valuation at this time may impact greatly on the funding for local services to which significant cuts have already been made through the Governments Austerity Program. This may be the case however will hopefully be offset over the short to medium term by an increase in economic activity and hence tax returns to the government which can be put back into these services.
The above considers the potential of reduction in business rates through the re-valuation however some areas such as parts of the south east will see marked increases in rateable values and rates payable. Some would hope that this would lead to a re-distribution of rateable values by both location geographically and the sectors.
All in all the re-valuation will be, we believe welcomed by both landlords and tenants alike and will hopefully give a boast to economic activity offsetting any reductions in initial revenues by increased economic growth, occupation of commercial buildings and enhance further reviews.
Some however may say that this has come too late.