INSIGHT - Edition Ten - Winter 2021 online - Flipbook - Page 18
COMMERCIAL
PROPERTY UPDATE
Paul Fairlamb, Associate, Commercial Chartered
Surveyor, takes a look at the need for the
reformation of Business Rates.
In the autumn budget, the Chancellor announced that
next year’s planned increase in the Business Rates
multiplier will be cancelled. This multiplier is used for
the calculation of Business Rates liability and is usually
increased on 1st April. It will remain at its existing rate
until 31st March 2023. A 50% Business Rates discount for
companies in the retail, hospitality and leisure sectors was
also announced for the Business Rates year to 31st March
2023. This relief is capped at £110,000 per business, and
therefore, whilst of benefit to small and medium sized
businesses within these sectors, it will not significantly
affect the larger high street chains. It is anticipated that
this discount is worth an estimated £1.7 billion.
There has been pressure on Government to carry out a
wholesale reform of Business Rates for many years. But
once again, such reform seems to be further delayed. The
Chancellor did announce that the business rates system
will move to a 3-yearly valuation pattern, the first of
17
which will be implemented in 2023. This 2023 revaluation
will be based on values as at 2021. The current rating
assessments were last implemented in 2017, based on
values in 2015. They are therefore, significantly outdated,
particularly in locations which have seen high growth or
falling values, and within sectors where rental values have
changed.
We come across the effects of this on many occasions on
property we let, sell, and manage. By way of example, we
are involved in some retail property where rents have fallen
significantly over the last 5 years, but potential occupiers
are still saddled with large rateable values and resulting
large rates bills. This makes these particular properties
more difficult to let, which often further reduces the rents
which can be achieved. In some cases this leads to high
streets being occupied by multiple charities, which, whilst
in itself is not detrimental, does lead to a reduction in
diversity in some retail centres.
A revaluation for Business Rates is urgently needed to
help create fairer Business Rates, particularly for the retail
sector. However, proposals for wider ranging reform are
also eagerly awaited.