Growth is normally seen as good for business. But in the case of the forthcoming 2017 business rates revaluation this might not necessarily be so. The last revaluation took place in 2010, based on 2008’s levels of rental value, pre-crash!
The next one should have been in 2015, based on rental information collected in 2013, when the economy was still in recession. Instead, the government delayed the revaluation by 2 years and now it will be based on hypothetical rental values back in April 2015.
This comes at a time when the economy is in recovery. Consequently, there has also been a revival in many commercial rental values. Various reports have highlighted this, with property rental value increases in September 2014 hitting some monthly highs not seen since 2007.
Paul Giness of ERA Property’s rating team comments, “It is unfortunate that the revaluation has slipped beyond its normal five year period. Instead of being aligned with the fluctuations of the general economy, it means business rates are going to remain high for many organisations.”
Back in December 2008, the outlook for commercial property values was gloomy. At that stage, the rental values that would underpin the 2010 revaluation had already been analysed. Similarly, the forthcoming revaluation will fail to reflect the recession’s impact, apart from locations where rental values are still in decline, because the 1st April 2015 date occurred during the recovery.
“It feels unjust,” Paul concludes. “The worst effects of the recession have come between the two rating revaluations without having any discernible influence on rateable values for many locations. This could hit some businesses hard.”
Against this backdrop, it is crucial for commercial property owners to consider any other factors that might have a negative effect on their rental values including incentives granted within a new lease and to be sure these are recorded in any information submitted to the Valuation Office.
In addition, when the Valuation Office publish the draft Rating List later this year, it is advisable to check your proposed new valuation thoroughly and look at options to make representations, where required and consider a review when the List goes live.
This is where rating experts can make a big difference in outcomes, casting a professional, forensic eye over property details to ensure that wherever possible, rateable values accurately reflect any issues surrounding a business property. Furthermore, they can help ratepayers understand the complex rating system and options for and against carrying out a review, that wherever possible, rental values accurately reflect any issues surrounding a business property.