Commercial property agents are calling for action on business rates in today’s budget, but admit that they expect to be disappointed.
Paul Easton, head of business rates at Storeys Edward Symmons, part of ES Group, said: “Business rates advisors are not expecting much on business rates from George Osborne in today’s 2014 Budget.
“What George Osborne should announce is the reinstatement of the business rates revaluation to 2015 that was postponed to 2017.
“But today could be a bit of a damp squib so far as business rates are concerned.”
Easton explained that rates bills are still based on the much higher rents fixed in 2008 before the economy went “pear-shaped”.
He said: “A revaluation in 2015, as statute provided for, would have been based on property rental values in April 2013 with new bills based on those values applying 0 from April 2015. This is simply not going to happen.”
Easton said that in the Autumn Statement in December 2013, the Chancellor announced:
A cap on the business rates increase to 2% (2.3% in reality) rather than an RPI-based increase.
Up to £1,000 off rates bills for retailers (and other users), where their rateable value is £50,000 or less, for 2014-15 and 2015-16.
A 50% discount from business rates for a new occupier of a retail property that has been empty for more than 18 months.
In England, the ability to pay business rates over 12 rather than 10 months.
The extension of the special small business rate relief scheme to 31 March 2015.
Easton said: “That they will consult in 2014 on changes to provide greater transparency on how rateable values are assessed which are due to be put in place in October 2014.
“The Government’s proposals will not in our view make any significant difference to ratepayers and there is a missed opportunity to correct some of the problems with appealing business rate assessments.”
Chris Wilkinson, head of business rates at LSH’s Newcastle office, said: “Calls to abolish the rating system are understandable, but they will carry little weight with ministers unless a viable alternative is proposed.
“Rates currently yield £26m in taxation towards local services. Without rates on business properties, which are relatively easy to identify and collect, an alternative form of local taxation would be required. For this reason, the government will be reluctant to abolish the system.
“The government’s decision to delay a revaluation until 2017 and the imposition of empty rate charges, which have been in place since 2008, represents a double whammy for the property industry.
“By the time of the next revaluation, demand will outstrip supply and rents will rise in some prime locations.”
Wilkinson said that as a result of the structural flaws in the business rates regime, Lambert Smith Hampton propose the following five point plan for reform:
An early revaluation to properly reflect the economic decline of many sectors and locations since the last valuation date of 2008
The abolition of empty rates to encourage reinvestment
An exemption of small buildings with a rateable value of less than £20,000 to be replaced by a nominal annual charge. This would require a much smaller bureaucratic input from Government
Self assessment of rateable value by business, subject to Valuation Office review and appeal
A three-yearly revaluation cycle going forward to ensure that rates properly reflect changes.