PROPERTY
Business rate review deferral to cost northern firms £2.3bn By Neil Hart, director at Bradley Hall. radical shake up of the business rates system is long overdue. Successive Governments have dithered over changing the archaic system, which reflects a reality that bolted a long time ago. Under the current set up, business rate valuations are linked to the market as it was back in April 2008, before interest rates plummeted and the economy nosedived into recession. In effect, this means that the vast majority of businesses are paying over-inflated rates that don’t reflect the market as it is today. This is called the antecedent valuation date. That situation is set to continue for some time yet because the Government has deferred the business rate revaluation – originally scheduled for this year – until 2017. That has caused outrage among the business community, with many firms postponing plans to move to bigger premises to avoid paying even higher rates. Others have decided that the cost is too prohibitive to rent or buy a property at all, instead preferring to run their business as a purely online operation. The impact of the two-year deferral has been laid bare in a new report which says that Northern-based businesses stand to lose a
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staggering £2.3 billion during the period. In contrast, the study – which was conducted by a national research company – forecasts that London-based businesses will save £1.5bn as a result of the deferment. It also predicts that the uniform business rate (the percentage at which you pay rates against the rateable figure) will rise from 48p to 51.2p in 2017 – meaning more expense for firms. The Valuation Office Agency (VOA) should
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be given sufficient resources to carry out regular revaluations without any interference from the Treasury, which rakes in an estimated £25bn from business rates each year. Politicians need to fast-track this revaluation and then commit to shorter revaluation periods than the current five-year span. Ideally, business rates should be reviewed every two or three years. They should also be calculated using the Consumer Price Index rather than the Retail Price Index, which includes housing costs and therefore inflates the rates to unacceptable levels. The current system doesn’t incentivise businesses to invest in property and needs to be looked at as a priority. A vibrant property market is vital to the health of the local and national economy. Business rates shouldn’t be kicked into the long grass by politicians. Companies – and the property sector in particular – deserve much more than that. For more information, visit www.bradleyhall.co.uk or call (0191) 232 8080