Rating revaluation - Impact on the Midlands
Friday, 30 September 2016
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It’s been seven years since the last rating revaluation, the point at which the government reviews the level of business rates levied on non-domestic properties.
Currently, rates are based on the rental value of properties as they were in April 2008. The last planned revaluation – which would have seen rates attuned to mid-recessionary 2013 levels – was postponed by the Government until April 2017, meaning that many businesses have continued to pay their rates at a higher level throughout the tougher economic environment.
Today marks the publication of the first new list published by the Valuation Office which will come into effect next April, reflecting 2015 rental values.
So what are the implications for the Midlands? While being something of a mixed bag, on the whole it’s relatively good news.
Prime offices in Birmingham look set to see a reduction in their rateable values of around 10%. This is a reflection of the broader national picture with office rents outside of London only recently demonstrating a return to pre-recessionary levels.
It’s a slightly more muted picture for retail with many not seeing a great deal of change from previous levels, particularly for high street operators. The delay of the last rates revaluation has been a point of concern for the retail sector, which has continued to be affected by the growth of online retailers.
There is some fluctuation, however, with for example The Fort shopping park in Erdington seeing a hugely significant fall in its RV of 15%.
The industrial picture however, is far more mixed. Rateable values for older factories have generally stayed the same, with fluctuation up or down by a few per cent. Prime logistics locations such as Hams Hall, DIRFT at Daventry and Magna Park, Lutterworth however are facing around a 10% rise in the rateable values of their properties.
This is in part a product of the rates system, precipitated by the decision in 2008 to levy business rates on empty properties. The development pipeline has been stymied for many years with many developers choosing to hold off on the speculative delivery of industrial units that could cost them money while remaining unoccupied.
As with any market, a lack of supply and a rejuvenated recent demand inflated the rental value of properties, leading to the increase in proposed rateable values.
With a new appeals system to be announced for the 2017 list the next few months could potentially be an interesting time for the Valuation Office and a litmus test of the revised system going forward.
For more information contact Graham Knight, Director on 0121 609 8806 or firstname.lastname@example.org.