Businesses beware... rates delay could affect you

The Government has announced their intention to postpone the next business rates revaluation by two years to 1 April 2017. The reason given is to provide stability and avoid unexpected hikes in business rates bills. There has been no prior indication or consultation of this announcement.

Despite the Government's stated aim, businesses should be extremely concerned at this decision as the implications are far wider than has been announced.

Since 1990 revaluations have taken place every five years to redistribute the business rates burden in line with changes in property values. To enable the task to be carried out by the Valuation Office Agency (VOA) the new values are based on rental levels two years before.

Current values in the 2010 Rating List are therefore based on economic and property market conditions in April 2008, which has caused conflict as the VOA maintains the recession had not taken effect at that time. Rateable values have stayed based on historic peak rental levels and it has been very difficult to change that through the appeal process.

The reality is that rental values in the property market have fallen dramatically in most sectors and locations. It is now common to find occupiers paying far more in business rates than in rent. A revaluation in 2015 and so based on 2013 market conditions would have addressed that inequality as it is intended to do. The postponement decision will actually see the peak values retained for an additional two years on top of the five years businesses have already had to suffer.

King Wilkinson & Co advise occupiers how to limit their rate liability. Over the past few years the mismatch between rating assessments and real market conditions has caused extreme problems when businesses can least afford it. The idea of that being extended is not a very good prospect for local occupiers and businesses.

In a stable market a revaluation will have a limited effect. When there has been a dramatic change is exactly the time one is needed not an excuse to delay. The revaluation should be welcomed certainly not put off.

King Wilkinson & Co is a company of property consultants based in Exeter that has specialised in providing business rates advice to occupiers for many years from surveyors who are all members of the Royal Institution of Chartered Surveyors and the Rating Surveyors Association.