Annual Business Rates Review - August 2021

ANNUAL BUSINESS RATES REVIEW England & Wales August 2021

About Altus Group

Altus Group Limited is a leading provider of software, data solutions and independent advisory services to the global commercial real estate industry. Our businesses, Altus Analytics and Altus Commercial Real Estate Consulting, reflect decades of experience, a range of expertise, and technology-enabled capabilities.

Our solutions empower clients to analyse, gain insight and recognise value on their real estate investments. Altus Group is a public company, with its shares listed on the Toronto Stock Exchange, headquartered in Canada, with approximately 2,600 employees around the world.

Altus Group clients range from SMEs to many of the world’s leading corporations, undertaking more business rates appeals in the

UK than any other commercial real estate firm, working across all main property sectors, including office, industrial and retail, offering sectorspecific expertise through dedicated teams.

The scale of Altus Group’s rating advisory business in the UK provides access to the data required to evidence the value of clients’ properties and challenge assumptions made by the Valuation Office Agency during periodic national Revaluations.

The combination of scale, expertise of professional valuers and a continuing policy of selective challenge results in Altus Group being the agent of choice; advising on £1 in every £10 of Rateable Value and accounting for 1 in 6 of all Checks raised.

altusgroup.com/property

UK Expert Services:

420

Number of staff

50,000+ Number of clients

160

Number of professional staff

up 40% during 2020

97,000

Number of properties under instruction

£

£6.6 billion Total Rateable Value under instruction

2

The Voice of Business As Britain’s leading and largest ratings advisory, Altus Group is at the forefront of the business rates debate, expertly crafting and dictating the narrative to bring about meaningful change.

Featured more than 8,000 times during the last year across the print and broadcast media, Altus Group is the go-to expert for analysis, forecasts and commentary across all sectors of the economy.

Simon Neville, City Editor, PA Media National News Agency for the UK and Ireland

“

“

I will always make time for Altus Group and trust that their data will be robust, timely and worth investing time in. Altus regularly secures coverage with us because their comments and data are always on point and by far and away faster than any competitor.

Contents 2.

About Altus Group

20.

Check, Challenge and Appeal

4.

Foreword

24.

Changes to the Local Rating Lists in England & Wales

5.

Executive Summary

28.

Focus on Holiday Homes

6.

Fundamental Review of Business Rates

29.

2021/22 Largest Ratepayers by Sector

7.

Manifesto For Change

32.

Focus on Public Houses

8.

UK Property Taxes

33.

Focus on Distribution Warehouses

11.

Business Rates in England & Wales

39.

Empty Rates

12.

COVID-19 Reliefs

41.

2020 Case Law Review

16.

English ‘Restart Grants’

Information correct at 31st July 2021.

3

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Foreword

Alex Probyn BSc, FRICS Global President, Property Tax

I am delighted to introduce our third Annual Business Rates Review.

The past year and a half was unimaginable in so many ways.

The global pandemic served to change how we work and interact with our colleagues and clients almost overnight, accelerating a digital transformation which will shape the way businesses operate for years to come. This accelerated “digitisation” is perhaps one positive outcome from such a challenging and uncertain time, driven by businesses adapting fast to meet the needs of their employees, clients and shareholders.

Our Property Tax business had already begun its digitisation journey, but there is no doubt that plans were accelerated by

the impact of COVID-19. Both internally and externally, our technology evolved and adapted at pace to allow the team to continue to deliver our services with continuity and quality, despite the challenges of remote working in an unpredictable world.

New data solutions will continue to augment and enhance our service delivery as we move through 2021 and beyond.

As we head towards the next Revaluation in 2023, our comprehensive data will drive intelligent workflows and invaluable insights to assist our team to deliver the best results for our clients.

As businesses evaluate how much real estate they require postpandemic, our enhanced data solutions will not only provide

cutting edge evidence to minimise business rates liabilities, but will also provide a unique viewpoint for lease events, as well as a growing platform capable of a complete service around the overall cost of occupation.

Let’s hope that the worst of the pandemic is now behind us. With businesses having now reopened and life returning to normal, albeit a ‘new’ normal, we are hopefully on a path to a strong economic recovery.

Altus Group will continue to play our part in supporting our real estate clients through our innovative services, and we will continue to adapt, innovate and deliver both for our colleagues and clients and for our shareholders.

I’m excited by the future!

4

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Executive Summary affecting tax liabilities foreshadow worse to come from the fundamental review of business rates? We have a further delay until at least autumn 2021 for those findings.

Robert Hayton BSc (Hons), MRICS President, UK Business Rates

This year I was delighted and honoured to take the reins as UK President of Expert Services at Altus Group. Although my role now encompasses all disciplines across the business, business rates continue to absorb a lot of my time.

The Non-domestic Rating (Lists) (No. 2) Bill, moving in law the next Revaluation in both England and Wales to 1st April 2023, received Royal Assent in March and will be based upon an estimate of open market rents on 1st April 2021.

This was the right thing to do

by Government. It would have been incomprehensible to expect businesses to tolerate a new rating cycle that simply excluded the effects of something so significant as COVID-19.

In my view, however, it was wrong to legislate against Material Change in Circumstances appeals. One of the few things that ratepayers appreciate regarding the business rates system is the right to challenge assessments which are excessive. The impact of COVID-19 gave rise to an appeal right, and Government allowed hundreds of thousands of ratepayers to incur costs in pursuing this only to retrospectively legislate to prevent appeals proceeding. A double kick in the teeth for business.

Does the Government’s willingness to make retrospective legislation

In place of the ordinary right of appeal, Government announced a relief fund which business will be able to access. Unfortunately, at the time of writing, we are awaiting details on eligibility criteria and the application process which isn’t now expected until the legislation has completed its passage through Parliament. The phrase too little, too late springs to mind.

Whilst occupied retail, leisure and hospitality premises in England will have received more than £17 billion in rates relief, all other sectors, including offices which were under a work from home instruction for the best part of 16 months, will receive only around 9% of that in a scheme when it does eventually land.

The postponement, undermined by the loss of appeal, leaves hundreds of thousands of ratepayers shouldering outdated tax bills until 2023, based upon rents in 2015 that bear no resemblance to the market today.

This is certainly a threat to the postpandemic recovery.

Government’s two ‘repair agendas’ for their economic recovery plan include “build back better” and “levelling up”. These phrases cover a huge range of tasks and policies that not only require significant investment but also a change in political mindset to succeed. The plan for growth through building back better is based upon infrastructure, skills and innovation whilst meeting the legislated goal of carbon net zero. All laudable. But green growth requires large scale changes in not only the behaviour of business but the actions of Government.

Taxation must be a key policy for providing clear and sustained incentives to reduce environmental damage as we tackle climate change head on.

As the UK hosts COP26 later this year in Glasgow, it would be unthinkable to head into that conference with the business rates system continuing to penalise those organisations which integrate sustainability into their strategies.

“Levelling up” must reduce the inequalities that exist between different parts of the UK and ensure communities no longer feel like they are being left behind. But asking underperforming sectors and regions to pay more in tax through downward transition to help subsidise those better faring economies, not only undermines that policy but works against it.

With the Government reporting on the system of business rates in England later this Autumn, it is clear that these slogans must translate into effective tax policies to support the recovery plan.

“Building back better” and “levelling up” are interlinked to the everincreasing burden of business rates, which our clients tell us acts as a disincentive to invest. The freeze in the multiplier for this financial year was a good start, but ending the ridiculous policy of annually increasing upwards the tax rate and instead focusing on growth is a far better way for local authorities to increase their local taxation revenues to fund local services.

Rishi Sunak has an unenviable task ahead of him. Expectations are high, particularly within the retail sector.

But with Government borrowing over £300 billion to combat COVID-19 in the first full year of the crisis, does the Chancellor have the financial headroom to placate a vocal and critical sector?

Our five-point manifesto for change has sought to adopt a pragmatic approach to reform against a backdrop of record peacetime borrowing. One thing is for sure, the pandemic cannot simply be an excuse for the failure to deliver meaningful change.

5

Fundamental Review of Business Rates Interim Report 23rd March 2021

Consultation:

more frequent Revaluation

29th June 2021

Final Report Autumn 2021

In the run up to the 2019 General Election the Government promised a fundamental review of business rates, publishing the terms of reference for the review at the Spring Budget in 2020. Views were sought regarding how the system currently works, issues to be addressed and ideas for reform - including an online sales tax.

Due to the wide-ranging impact of the pandemic and ongoing economic uncertainty, the Government confirmed that the Treasury’s final report regarding the fundamental review of business rates will be released in Autumn 2021, at a time when the longer-term outlook of the economy and public finances postCOVID-19 will, it expects, become more apparent.

The Conservative manifesto pledge promised to permanently cut the overall rates burden but that pledge

was made before the emergence of a global pandemic. Borrowing pushed the national debt to £2.17 trillion at the end of April, around 98.5% of GDP, the highest debt ratio since 1962.

This should not result in shelving potential reform. There are fiscally neutral changes which could be implemented to improve fairness and pave the way for a better system in the future.

An interim report was published on 23rd March 2020, including a summary of responses to the call for evidence, together with several tax documents and consultations on a wide-range of tax-related issues.

On 29th June 2021, plans were announced to cut the cycle of Revaluations of non-domestic properties to every 3 years delivering

upon the commitment made at the 2017 Autumn Budget, whilst launching a further consultation on the trade-offs needed to achieve that.

The Welsh Government is also considering a longer-term policy change regarding the length of time between each Revaluation and exploring options for reform.

“It is unclear whether the Chancellor remains committed to reducing the overall rates burden. Indeed, with the increased spending during the COVID-19 restrictions, he may not have the financial headroom to do so.”

Mike Dunlevey, BSc Est Man, MRICS Vice President, Altus Group

6

Manifesto For Change Our 5 point plan adopts both a pragmatic and realistic approach to the reform of the business rates system, having regard for the deficit whilst delivering key Government policy objectives of reducing the burden, levelling-up and building back better.

Delivering the Cut The continuation of indexation, the annual increase of the multiplier, even at the lower CPI measure of inflation, will ultimately lead to more paid in property taxes than in rent, culminating in the tax rate eventually exceeding £1, an effective 100% tax rate on open market rents at the Antecedent Valuation Date. That just isn’t sustainable.

Permanently removing annual inflationary rises would result in business rates becoming more predictable and sustainable. It is a deliverable, meaningful reform which can be funded by supporting and incentivising growth.

Levelling-up Removing downward transition, which could be funded by a small supplement on all bills, would result in an immediate tax stimulus for depressed regions where the effects of the 2023 Revaluation are likely to be far more pronounced. The measure also avoids compounded downward transition for those in transition for the whole of the 2017 List who have never reached their true liabilities.

Asking underperforming sectors and regions to pay more in tax to help subsidise those better faring economies simply does not support the ambitious desire to “level-up” the fortunes of struggling towns left behind - nor does it satisfy the principles underpinning any system of taxation, fairness and supporting growth.

Build Back Better A green energy pledge promising to “build back better” post COVID-19 can be delivered by providing clear and sustainable tax policies through financial incentives to reduce environmental damage.

Businesses need a degree of certainty that the investment they make to reduce that damage will be worthwhile. The business rates system should be leveraged to stimulate investment in energy efficient and carbon abatement solutions.

Where a business adopts sustainability within their process to reduce their carbon footprint it should be for the benefit of the planet not the public purse. It simply makes no sense to continue to penalise businesses for lowering their emissions.

Accelerate Appeals Business rates appeals must be expediated through shorter targets for resolution. Once a Check has been accepted under the CCA regulations and passes to the Challenge stage, 18 months is allowed in law for a response before a business can take their case to the Independent Valuation Tribunal.

The VOA already has a target to respond to 90% of Challenges within 12 months, but the statutory provision should be changed to reduce the maximum response time from 18 months to 12 months. This should accompany a stretch target of 9 months for 90% of Challenges, requiring a combination of more resource and better deployment of existing resource.

Realism Empty rates must be modernised. The proliferation of e-commerce, shifting consumer preferences, high street cost pressures and the impact of the pandemic have all led to an increase in empty properties.

The current 3 and 6 month exemption periods are woefully inadequate to allow commercial properties to be refurbished and/or repurposed, marketed and re-let.

7

UK Property Taxes

Property derived tax revenues topped £90 billion for the first-time according to the annual revenue statistical release from the Organisation for Economic Co-operation and Development (OECD).

OECD state overall property taxes across the UK rose to £90.6 billion during the financial year (2019/20), up from £88.4 billion during 2018/19.

UK Property Taxes 100 90

£billions

80 70 60

2019/20

2018/19

2017/18

2016/17

2015/16

2014/15

2013/14

2012/13

2011/12

2010/11

50

Source: OECD

Tax revenue from property has risen by 46.6% since 2010, with £757.8 billion collected across the UK during the last decade.

In the UK, property taxes include all receipts from Council Tax, Business Rates, Stamp Duty Land Tax (SDLT) and Land and Building Transaction Tax (LBTT) in Scotland.

Total overall tax revenues for 2019/20 rose to £731.1 billion in the UK, up £25.9 billion on the previous financial year.

Property taxes in the UK accounted for 12.3% of overall taxation – around £1 in every £8 of all taxes collected - the highest in the developed world.

8

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Top 5 OECD Countries GBR 12.33%

USA 12.20%

CAN 11.72%

ISR 10.26%

KOR 11.61%

Tax on Property 14 12

% of Taxation

10 8 6 4 2 0

GBR

USA

CAN

KOR

ISR

LUX

COL

FRA

GRC

BEL

Top 10 Countries Source: OECD

Across all EU member countries there is far less reliance upon property for tax revenues, at around an average of just 4.1%.

Top 5 EU Member States

LUX 9.78%

FRA 8.92%

GRC 7.91%

BEL 7.83%

ESP 7.26% 9

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

UK Property Taxes 2019/20 - £billions

£30.8 billion £59.8 billion

Business Rates

Council Tax, SDLT and LBTT Source: OBR/OECD

Around a third of all UK property taxes comes from business rates.

UK Business Rates Receipts £35

£31 billion

£30

£23.8 billion £18.1 billion

£20 £15 £10 £5 £0

2019/20

“

2020/21

2021/22

Source: OBR

“

£billions

£25

The £12.9 billion drop in receipts from business rates in 2020/21 largely reflects the business rates ‘holiday’ in place for the occupied retail, hospitality, leisure and nursery sectors in England, and similar schemes across the devolved nations.

Martin O’Neill, MRICS IRRV Regional Vice President, Altus Group

10

Business Rates In England & Wales Business Rates Multipliers Business rates bills in both England and Wales were not subject to an annual inflationary increase during 2021/22.

As set out in the Spending Review published November 2020, the Government froze the business rates multiplier in England for 2021/22, with the Welsh Government subsequently following suit.

Under normal practice, since April 2018, multipliers have increased in line with the preceding September headline rate of inflation.

Consumer Price Index (CPI) - September 2020

0.5% Source: ONS

Rises have been capped in the past, and although unprecedented, the caps were relatively easy to implement with inflation substantially below a 2% target.

The small business non-domestic rating multiplier for 2021/22 is 49.9p. The standard nondomestic rating multiplier is 51.2p. Without a freeze, the multipliers would have increased to 50.1p and 51.4p respectively. The City of London multipliers have been set at 50.7p for small business and 52p for other businesses.

For the 2021/22 financial year the non-domestic rating multiplier will be 53.5p.

Applying CPI for 2021/22, the multiplier would have been set at 53.8p.

“

“

Freezing rates is the right thing to do, but that measure alone is insufficient. Rateable Values used to determine bills should have been quickly and significantly reduced to reflect the impact of the pandemic.

Philip Legg, BSc, MRICS Regional Vice President, Altus Group

11

COVID-19 Reliefs

England £6.1 billion Retail, Leisure & Hospitality During 2020/21 the business rates ‘holiday’ provided 358,264 occupied retail, leisure and hospitality premises in England, not in receipt of 100% small business rates relief, with a yearlong exemption.

The Government continued to provide 100% business rates relief from 1st April 2021 to 30th June 2021 for occupied retail, hospitality and leisure properties in England, at an estimated cost of £2.98 billion.

Businesses could choose to opt out of the relief.

The 3-month extension to the business rates ‘holiday’ in England saved hospitality such as •

pubs; £193.66 million

•

restaurants; £158.31 million

•

hotels; £232.99 million

•

cafes; £30.76 million

‘Essential retailers’ such as superstores, supermarkets, fascia convenience stores and food/DIY warehouses remained eligible for £758 million of that relief.

This was followed by 66% business rates relief for the period from 1st July 2021 to 31st March 2022, capped at £2 million per business for properties required to close on 5th January 2021, or £105,000 per business for other eligible properties.

Nurseries also qualified for relief in the same way as other eligible properties.

When combined with Small Business Rates Relief, circa 750,000 retail, hospitality and leisure properties in England paid no business rates for 3 months from 1st April 2021.

12

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Airports & Ground Handling The Government renewed the Airports and Ground Operations Support Scheme (AGOSS) for a further 6 months from 1st April 2021.

Eligibility for the scheme is for 1) any commercial airport situated within England with a valid commercial licence from no later

than 24th November 2020, which operated at least 12 scheduled commercial passenger flights in 2019 and; 2) any ground handling company providing any of the handling services listed in EI Directive 96/67/ EC in accordance with serving a commercial airport in England.

Firms must have been in receipt of business rates liabilities for the

2020/2021 financial year whilst demonstrating the business’ COVID-19 losses during that period.

Further support for those eligible businesses in England will be up to the equivalent of half of their business rates liabilities during 2021/22, subject to certain conditions, and a cap of £4 million.

Rateable Value 2017

Rates Liabilities 2021/22

£212,830,000

£115,141,030

Gatwick Airport

£56,990,000

£29,691,790

Manchester Airport

£27,600,000

£14,379,600

Stansted Airport

£24,520,000

£12,774,920

Birmingham Airport

£11,710,000

£6,100,910

London Luton Airport

£9,740,000

£5,074,540

East Midlands Airport

£6,870,000

£3,579,270

Bristol Airport

£6,530,000

£3,402,130

Newcastle Airport

£4,860,000

£2,532,060

Liverpool Airport

£4,300,000

£2,240,300

English Civil Airports - 10 Largest Liabilities Heathrow Airport

Source: Real Estate Adviser, Altus Group

The Ministry of Housing, Communities and Local Government forecast Council income from business rates in England at £14.95 billion during 2020/21, but had estimated revenue to rise to £25.12 billion during 2021/22 if the ‘holiday’ hadn’t been extended.

The Office for Budget Responsibility state these measures will provide £6.1 billion of business rates relief during 2021/22 in England with Councils fully compensated for the loss of income. Forecast rates revenue accordingly falls to £19.02 billion during 2021/22, up £4.07 billion on the prior year.

13

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Wales £380 million The business rates ‘holiday’ in Wales modified to those occupied retail, leisure and hospitality premises with a Rateable Value of £500,000 and below, effectively exempting the largest type of supermarkets, has been extended by 12 months for 2021/22 from 1st April.

However, the Welsh Government committed to providing firms in the leisure and hospitality sectors with a Rateable Value of over £500,000 with 100% rates relief during 2021/22.

In terms of financial support for businesses England, policy by the

UK Government has resulted in additional Barnett consequentials of £740 million for the Welsh Government.

The Welsh Government relief package, in combination with its existing Small Business Rates Relief scheme, will ensure that more than 70,000 businesses will continue to pay no rates at all during the 2021/22 financial year.

The £500,000 Rateable Value ceiling will exclude a total of 164 retail premises with rates liabilities of £101.31 million.

“Wales has gone further than England with a straightforward yearlong £380 million extension to the business rates holiday, whilst removing the Rateable Value ceiling exemption for the leisure and hospitality sectors.”

Dean Bosley Regional Vice President, Altus Group

Big 4 Stores Excluded From Welsh Rates Holiday 60

Number of Stores

50

48

40

27

30

25

20

10

10 0 Tesco

Morrisons

Asda

Sainsbury’s

Source: Real Estate Adviser, Altus Group

14

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Repayment of Rates Relief The Government is legislating to ensure that the business rates relief repayments made by certain businesses are deductible for corporation tax and income tax purposes. This will ensure that businesses are no worse off from a tax perspective than if they had paid the business rates in the first place and will apply to repayments made to the devolved administrations as well as to those made in relation to England.

At the beginning of November 2020, Howdens Joinery became the first major retailer to decide to return the business rates relief for 2020/21. Others followed suit, and by the Spring Budget, £2.16 billion has been pledged publicly to be repaid by 14 large retailers, including the ‘Big 4’ supermarkets, with the repayment deemed as a ‘gift’ by HM Treasury.

Retailer

Estimated Cost of Rates Holiday 2020/21

Tesco

£585m

Sainsbury’s

£440m

Asda

£340m

Morrisons

£274m

Kingfisher

£130m

Aldi

£109m

Lidl

£108m

B&M

£80m

Travis Perkins

£50m

Pets at Home

£29m

Burberry

£8m

Howdens

£8m

Whole Foods

£2m

AO

£300,000

“

“

Source: Real Estate Adviser, Altus Group

Some parts of the retail sector thrived during the pandemic, and the rates holiday was the icing on an already very sweet cake.

Tesco, Sainsbury’s, Asda, Morrisons, Aldi, Lidl, Pets at Home and B&M Bargains all confirmed they would use the opt out mechanism for the 3 month extended business rates ‘holiday’ from 1st April 2021 to 30th June 2021, with £490 million across the UK estimated to be foregone.

Retailer

Estimated 3 Month Opt Out Cost

Tesco

£146m

Sainsbury’s

£110m

Asda

£85m

Morrisons

£68m

Aldi

£27m

Lidl

£27m

B&M

£20m

Pets at Home Total

£7m £490m

Around £870 million received through the business rates ‘holiday’ during 2020/21 by ‘essential retailers’ wasn’t repaid, despite those retailers remaining open throughout the pandemic. Retailers which have been unwilling to repay, despite seeing turnovers surge, were still entitled to a further 3 months additional relief from 1st April 2021.

15

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

English ‘Restart Grants’ At the Spring Budget the Government announced ‘Restart Grants’ in England, worth up to £18,000 per property for hospitality, accommodation sectors, as well as leisure, personal care and gym businesses - with a less generous scheme of up to £6,000 for each non-essential retail property.

Number Of Properties Eligible For Restart Grants (England)

Hospitality, Leisure, Accommodation Sectors, Personal Care & Gym

242,660

Non-Essential Retail

437,941

0

100,000

200,000

300,000

400,000

500,000

Source: Real Estate Adviser, Altus Group

The scheme saw hospitality, accommodation sectors and leisure, personal care and gym businesses with a Rateable Value of exactly £15,000 or below receiving a payment of £8,000 and £2,667 for non-essential retail. Those with a Rateable Value over £15,000, but less than £51,000, will receive 50% more with a payment of £12,000 and £4,000 for non-essential retail.

The higher maximum grants of £18,000 and £6,000 for non-essential retail is available for those businesses occupying properties with a Rateable Value of exactly £51,000 or above.

16

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Hospitality, Accommodation Sectors, Leisure

£8,000 Grant

£12,000 Grant

£18,000 Grant

Rateable Value £15,000 or under

Rateable Value over £15,000 and less than £51,000

Rateable Value exactly £51,000 or above

£1,512,000

£4,284,000

£2,142,000

£128,000

£180,000

£540,000

Arenas

£40,000

£-

£234,000

Aquaria

£24,000

£24,000

£396,000

Bingo Halls (National Scheme)

£312,000

£864,000

£3,528,000

Bird Sanctuaries

£648,000

£216,000

£36,000

£8,000

£228,000

£3,366,000

£264,000

£2,196,000

£144,000

Bowling Greens (Outdoor)

£14,768,000

£204,000

£-

Cafes

£84,824,000

£41,676,000

£13,500,000

£1,600,000

£3,240,000

£2,142,000

Caravan Parks (Leisure) (National Scheme)

£12,272,000

£9,168,000

£10,512,000

Caravan Sites & Pitches (National Scheme)

£26,448,000

£4,056,000

£1,548,000

£40,000

£48,000

£2,106,000

£392,000

£432,000

£1,044,000

£1,992,000

£60,000

£-

£928,000

£1,200,000

£6,354,000

Clubhouses

£31,184,000

£4,416,000

£288,000

Clubs & Institutions

£51,872,000

£18,456,000

£2,916,000

£192,000

£672,000

£738,000

Concert Halls (National Scheme)

£48,000

£144,000

£666,000

Conference & Exhibition Centres

£200,000

£264,000

£1,152,000

£2,568,000

£2,820,000

£1,584,000

Country House Hotels

£24,000

£192,000

£1,998,000

Cricket Centres

£32,000

£48,000

£-

Dance Schools & Centres

£6,256,000

£1,836,000

£450,000

Field Study, Activity & Adventure Centres

£2,368,000

£3,072,000

£1,368,000

£72,000

£492,000

£576,000

£296,000

£360,000

£738,000

£1,448,000

£7,812,000

£15,822,000

£872,000

£912,000

£432,000

Guest & Boarding Houses

£51,112,000

£6,876,000

£792,000

Gymnasia/Fitness Suites

£21,136,000

£14,748,000

£6,318,000

£104,000

£120,000

£54,000

£157,072,000

£15,444,000

£1,926,000

£40,000

£36,000

£234,000

£352,000

£264,000

£306,000

£48,000

£72,000

£936,000

Personal Care & Gym Restart Grants Amusement Arcades Amusement Parks

Bowling Alleys Bowling Centres (Indoor)

Cafes/Restaurants Within/Part of Specialist Property

Casinos & Gambling Clubs Chalet Parks (National Scheme) Changing Rooms

Cinemas (National Scheme)

Coaching Inns

Conference Centres in Country Houses

Food Courts Go Kart Rinks Golf Courses Golf Driving Ranges

Gymnasia/Fitness Suites Within/Part of Specialist Property Hairdressing/Beauty Salons

Health Farms Heritage Railways Holiday Centres

17

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Holiday Homes (Self Catering)

£509,256,000

£13,116,000

£2,340,000

Hostels

£6,672,000

£2,988,000

£1,800,000

Hotels (3 Star & Under)

£6,984,000

£16,632,000

£24,300,000

Hotels (4 Star & Above) & Major Chain Operated

£96,000

£2,160,000

£56,970,000

Ice Rinks

£48,000

£120,000

£270,000

£1,240,000

£552,000

£162,000

£96,000

£768,000

£2,178,000

£368,000

£48,000

£-

£88,000

£24,000

£36,000

Museums & Art Galleries (Contractors)

£1,656,000

£2,532,000

£6,642,000

Museums & Art Galleries (Non-Contractors)

£4,568,000

£2,004,000

£1,638,000

Night Clubs & Discotheques

£1,880,000

£6,828,000

£6,264,000

Pavilions

£6,904,000

£228,000

£54,000

£672,000

£228,000

£54,000

£56,000

£60,000

£360,000

£1,712,000

£816,000

£774,000

£110,688,000

£179,916,000

£155,268,000

£376,000

£1,044,000

£5,346,000

£78,992,000

£132,084,000

£113,544,000

£432,000

£1,656,000

£666,000

£88,000

£132,000

£216,000

£648,000

£168,000

£18,000

£72,000

£156,000

£144,000

£2,560,000

£3,804,000

£108,000

Sports & Leisure Centres (Private)(Dry Only)

£552,000

£2,484,000

£12,096,000

Sports & Leisure Centres (Private)(Wet & Dry)

£168,000

£480,000

£10,530,000

£8,000

£48,000

£882,000

£792,000

£408,000

£36,000

£2,904,000

£804,000

£648,000

£384,000

£1,512,000

£3,150,000

£1,432,000

£408,000

£36,000

£96,000

£192,000

£666,000

Tennis Courts/Clubs

£9,584,000

£768,000

£90,000

Theatres (National Scheme)

£1,936,000

£2,364,000

£4,626,000

£-

£-

£252,000

£2,792,000

£2,088,000

£2,880,000

£125,136,000

£3,636,000

£144,000

£3,168,000

£5,628,000

£3,744,000

£120,000

£228,000

£576,000

Information/Visitor Centres

Lodges (National Scheme) Miniature Railways

Model Villages

Pitch & Putt/Putting Greens Pleasure Piers Public Halls Public Houses/Pub Restaurants Public Houses/Pub Restaurants (Inc. Lodge) Restaurants Roadside Restaurants (National Scheme) Roller Skating Rinks Salons/Clinics Within/Part of Specialist Property Ski Centres Snooker Halls/Clubs

Sports & Leisure Centres Within/Part of Specialist Property Squash Courts Stately Homes & Historic Houses (National Scheme) Swimming Pools (Local Authority) Swimming Pools (Private) Tennis Centres

Theme Parks Tourist Attractions/Dark Rides Village Halls, Scout Huts, Cadet Huts Etc Wine Bars Zoos & Safari Parks

Source: Real Estate Adviser, Altus Group

18

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Retail Restart Grants

£2,667 Grant

£4,000 Grant

£6,000 Grant

Rateable Value £15,000 or under

Rateable Value over £15,000 and less than £51,000

Rateable Value exactly £51,000 or above

£-

£16,000

£366,000

£2,336,292

£6,024,000

£17,268,000

£-

£8,000

£198,000

Car Washes (Stand Alone)

£6,222,111

£2,032,000

£18,000

Car/Caravan Sales/Display/Hiring Sites

£6,851,523

£3,144,000

£456,000

£-

£4,000

£12,000

£1,693,545

£160,000

£2,598,000

Large Shops (750 - 1850m²)

£8,001

£56,000

£12,462,000

Large Shops (Over 1850m²)

£5,334

£848,000

£648,000

Markets (Other Than Livestock)

£1,690,878

£3,596,000

£1,500,000

Pet Grooming Parlours

£1,557,528

£337,108,000

£160,398,000

£10,668

£12,224,000

£5,868,000

Sales Kiosks

£11,086,719

£8,000

£-

Sales Offices

£1,397,508

£160,000

£36,000

£775,574,268

£232,000

£156,000

Shops Within/Part of Specialist Property

£2,971,038

£1,968,000

£486,000

Showrooms

£9,625,203

£-

£-

Car Auction Buildings/Sites Car Showrooms Car Supermarkets

Departmental & Walk Round Stores (Large) Kiosks Within/Part of Specialist Property

Plant Nurseries

Shops

Source: Real Estate Adviser, Altus Group

The definition of a non-essential retail business excludes food retailers, food markets, supermarkets, convenience stores, corners shops, off licences, breweries, pharmacies, chemists, newsagents, animal rescue centres and boarding facilities, building merchants, petrol stations, vehicle repair and MOT services, bicycle shops, taxi and vehicle hire businesses, education providers including tutoring services, banks, building societies and other financial providers, post offices, funeral directors, laundrettes and dry cleaners, medical practices, veterinary surgeries and pet shops, agricultural supply shops, garden centres, storage and distribution facilities, wholesalers, employment agencies and businesses, office buildings, automatic car washes and mobility support shops. £1.41 billion was made available in grants for non-essential retail and £2.40 billion for hospitality and accommodation in addition to leisure, personal care and gym businesses.

The funding was only available to businesses on the local Rating List paying business rates. Funding for the one-off grants was made available to Councils on 1st April 2021. The application closure date for this scheme was 30th June 2021 and final payments should have been made by 31st July 2021.

The one-off grants were subject to anti-fraud checks, with Councils recommended to use credit reference agencies to verify the bank accounts of companies and provide financial insight to confirm if the company was trading at the relevant date to qualify for the grant.

The limit for subsidy controls (previously known as EU State Aid) for COVID-19 support was around £3.5 million (€4m).

Following the Spring Budget this was increased to £10.9 million, subject to certain criteria such as demonstrating a decline in turnover of at least 30% compared to the same period in 2019.

“

“

The increase in subsidy controls meant a far larger number of premises occupied by the big operators would receive the grants which, in conjunction with the business rates relief and other measures, makes for a compelling basket of support ahead of their reopening.

Ben Nelson, BSc (Hons), MRICS Regional Vice President, Altus Group

19

Check, Challenge and Appeal A new system for Challenging business rates bills was introduced on the 1st April 2017. ‘Check, Challenge and Appeal’ significantly changed the way business rates appeals were handled in England under a three-stage process:

£ “Check”

“Challenge”

“Appeal”

The first stage. Ratepayers (or their representatives) check the information that the Valuation Office Agency (VOA) hold about their property.

The ‘proposal’ stage. A proposal must be made within 4 months of the date the check was completed. If the VOA does not agree with the proposal and the ratepayer does not withdraw it, the VOA will serve a notice of decision setting out why they are not making the alteration or are making a different alteration from the one proposed.

The final stage where, if the ratepayer is not happy with the VOA notice of decision, an appeal can be made to the independent tribunal. This must be done within 4 months of the date of the VOA decision notice.

In England, as of 31st March 2021, under the first 4 years of the 2017 Local Rating Lists, the Valuation Office Agency (VOA): •

Received 568,340 Checks under the Check, Challenge, Appeal (CCA) regulations.

•

127,750 of these, around 22% of all Checks since the start of the 2017 Lists, were registered in the first quarter of 2021 (to 31st March 2021), during the third national lockdown.

•

303,260 non-domestic properties such as offices, factories, shops, pubs and restaurants lodged a Check to their Rateable Value during the 2020 calendar year, up 321% on the 71,990 Checks during the corresponding period in 2019.

20

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Number of Checks against the England 2017 Non-Domestic Rating List April 2017 to March 2021

Checks

Case Status Received Resolved

Month Source: Valuation Office Agency

The huge spike in volume reflected the restrictive measures introduced to counter the pandemic. The restrictions put in place hit occupiers of commercial property hard and significantly reduced the rental worth of many properties.

The largest spike in Check volume occurred at the onset of the pandemic, coinciding with the first set of national lockdown restrictions.

August 2020 saw the highest number of Challenges received in a single month by the VOA as a direct consequence of the rise in Checks.

A total of 101,260 Challenges have been registered under the Check, Challenge, Appeal (CCA) regulations.

Number of Challenges against the England 2017 Non-Domestic Rating List April 2017 to March 2021

Challenges

Case Status Received Resolved

Month Source: Valuation Office Agency

21

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

‘Material Change in Circumstances’ appeals allow ratepayers to seek substantial adjustments to their Rateable Value to reduce their business rates.

At the 2021 Spring Budget, The Office for Budget Responsibility forecasted revenue from business rates would be hit by around £3 billion during the 2021/22 financial year due to pandemic related Appeals. In contrast, the Rating Surveyors Association estimated that cost to be far higher; in the region of £5 billion.

Summary of Overall Checks and Challenges in England April 2017 to March 2021

Outcomes Registered

Resolved

Incomplete

Outstanding

Checks

568,340

544,050

..

24,290

Challenges

101,260

29,340

5,540

66,370

Source: Valuation Office Agency

On 25th March 2021, the Government announced legislation to stop and disregard business rates appeals in England citing COVID-19 as an MCC, instead choosing to work with Local Authorities to distribute a new £1.5 billion fund to sectors specifically excluded from the retail, hospitality and leisure rates relief schemes worth £11.06 billion during 2020/21 and £6.1 billion during 2021/22.

In England, a Statutory Instrument came into force immediately clarifying that COVID-19 and the Government’s response were no longer considered relevant in terms of MCC appeals. Primary legislation to bring into effect Government policy retrospectively has been laid before Parliament.

The VOA will take no further action on outstanding COVID-19 related MCC cases, given the introduction of the retrospective primary legislation.

The changes seek solely to protect Local Authorities from uncertainty regarding their financial position through losses on appeal under business rates retention. In addition, the legislation will potentially save Local and Central Government circa £3.5 billion during 2021/22; to the detriment of ratepayers.

“

“

On 1st July 2021 large retail, leisure and hospitality businesses in England were effectively returned to full business rates liabilities, calculated by reference to rents being paid 6 years ago bearing no resemblance to the here and now, with the fundamental right of appeal to seek valuation adjustments being retrospectively removed.

Simon Cronk BSc FRICS Director, Altus Group

The process for challenging the Rating List differ between England and Wales. In Wales a Challenge, known as a Proposal, is made to the Valuation Officer asking them to change the entry in the Rating List.

After a period of discussion, if the Valuation Officer cannot reach agreement with the ratepayer, the matter is referred to the Valuation Tribunal Service, at which stage it becomes an Appeal.

In Wales, as of 31 March 2021, the VOA had: •

Received 34,490 Challenges.

•

7,100 of these, around 21% of all Challenges since the start of the 2017 List, were registered in the first quarter of 2021 (to 31st March 2021).

22

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Number of Challenges against the Wales 2017 Non-Domestic Rating List April 2017 to March 2021

Challenges

Case Status Received Resolved

Quarter Source: Valuation Office Agency

The number of Challenges received against the Welsh 2017 Rating List increased in the quarter ending 31st March 2021 to their highest ever level. The spikes in volume can be attributed to citing the pandemic as a Material Change in Circumstances.

Elections to the Senedd took place on 6th May 2021 with the pre-election period, previously known as ‘purdah’, commencing on 25th March 2021, the same day England introduced the statutory instrument.

Whilst the devolved administration in Wales will receive an additional £90 million under the Barnett consequential flowing from the political decision to legislate retrospectively in England, Welsh Ministers were precluded from making any announcements or taking decisions which are or could be construed as conferring party-political or electoral advantage.

The Welsh Government subsequently announced in July 2021 their intent to also legislate by seeking to include provisions for Wales in the UK Government’s Rating (Coronavirus) and Directors Disqualification (Dissolved Companies) Bill, which will operate to disregard Covid-19 appeals on the basis of a Material Change in Circumstances.

23

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Changes to the Local Rating Lists In England & Wales The total number of public and private sector properties in England and Wales liable for business rates, across all sectors of the economy, increased by 21,120 during the 2020 calendar year to 2,104,143 as of 1st January 2021, taking into account changes to Local Rating Lists.

Number of Properties Liable for Business Rates in England and Wales

516,980

611,784

Industrial

Office

544,709

430,670

Other

Retail

Source: Real Estate Adviser, Altus Group

The overall combined Rateable Value, which forms the basis of the business rates calculation between 2017 and 2023 (extended 6-year cycle), fell £1,074,391,763 to £66,195,723,492 as of 1st January 2021 in England and Wales.

Total Rateable Value In England & Wales £25 £19.8 billion

£billions

£20 £15

£14.2 billion

£15.1 billion

£16.9 billion

£10 £5 £0

Industrial

Office

Retail

Other

Source: Real Estate Adviser, Altus Group

24

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

As of 1st January 2021, compared with 1st January 2020, the overall number of properties liable for business rates increased by 21,120, considering new and deleted properties.

The office sector experienced the largest growth, with a net change of +12,317 properties, up 32% on 2019 growth. Whilst the industrial sector experienced an increase of +10,467, down 38% on the previous years’ growth.

The retail sector, despite 15,747 shops closing their doors during 2020 amid the structural changes accelerated by the pandemic and the growth of online retail, still saw the number of overall retail premises increase by +1,621, up 98% on 2019 growth.

Change In Property Numbers In England & Wales

Retail

1,621

Other

-3,285

Offices

12,317

Industry -6000

-4000

-2000

10,467 0

2000

4000

6000

8000

10000

12000

14000

Property Numbers Source: Real Estate Adviser, Altus Group

The ‘other’ sector, a catch-all encompassing leisure, tourism, hospitality and public sector buildings, changed from positive growth in 2019 to negative growth in 2020.

‘Other’ Sector Growth & Decline

2019 12,135

2020

14,000

12,000

10,000

8,000

6,000

4,000

2,000

-2,000

-4,000

-6,000

-8,000

-10,000

-12,000

0

-14,000

-3,285

Property Numbers Source: Real Estate Adviser, Altus Group

25

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Overall changes to the local Rating Lists in England and Wales during the calendar year 2020 saw Rateable Value decrease by £1,074,391,763.

The net decrease includes Rateable Value added to the Rating List through new properties, increases for existing properties and Rateable Value lost during the calendar year due to successful Appeals. It also includes deletions due to properties being temporarily removed from the List due to refurbishment, or those permanently removed through demolition.

Change In Rateable Value In England & Wales Industrial

Office

Retail

Other

£0 - £50m - £100m - £150m - £200m - £250m - £300m - £350m - £400m - £450m Source: Real Estate Adviser, Altus Group

Change in Property Volume During 2020 By Property Classification Biggest Growth

Number of Properties Number of Properties Number of Properties 1st January 2020 1st January 2021 Difference

Offices (Inc Computer Centres)

418,353

430,670

12,317

Holiday Homes (Self Catering)

63,707

72,643

8,936

365,094

371,307

6,213

3,049

7,381

4,332

91,203

93,859

2,656

407

2,493

2,086

24,837

25,920

1,083

159

1,147

988

424,781

425,673

892

21,232

22,092

860

Factories, Workshops & Warehouses (Incl Bakeries & Dairies) Independent Distribution Network Operators (INDOs) Stores Renewable Power Generators Photovoltaic Land Used for Storage Renewable Power Generators - Wind Shops Hairdressing/Beauty Salons

Source: Real Estate Adviser, Altus Group

26

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

“

“

Taxation of renewable power generation is, essentially, at odds with the Government’s initiatives on energy efficiency and climate change.

Stephen Philp, MRICS MCMI Rating Chairman, Altus Group

One of the biggest areas of growth during the 2020 calendar year was in respect of renewable power generators. The Prime Minister told the Conservative Party virtual conference in 2020 that “we must build back better by becoming more competitive in both tax and in regulation.” The Chancellor can deliver upon that pledge by providing clear and sustained tax incentives to help reach carbon net zero by 2050.

Investment in renewable energy to produce heat or power from solar technologies, biomass, biofuels, fuel cells, photovoltaics, wind, water (including waves and tides, but excluding production from the pumped storage of water) and geothermal systems should not translate into higher business rates bills.

Biggest Decline ATMs

Number of Properties Number of Properties Number of Properties 1st January 2020 1st Jan 2021 Difference 15,228

2,682

-12,546

Electricity Undertakings (Non-Statutory)

3,512

44

-3,468

Power Generators

3,377

1

-3,376

36,809

34,806

-2,003

Airport Let Outs

1,341

276

-1,065

Advertising Right

38,976

38,249

-727

Surgeries, Clinics, Health Centres (Rental Valuation)

17,218

16,521

-697

654

35

-619

41,063

40,617

-446

3,501

3,104

-397

Communication Stations (National Scheme)

Photographic Booths Public Houses/Pub Restaurants (National Scheme) Showhouses (National Scheme)

Source: Real Estate Adviser, Altus Group

ATM numbers, rated separately, saw the biggest decline in numbers during the 2020 calendar year. In May 2020, The Supreme Court in Cardtronics UK Ltd and others (Respondents) v Sykes and others (Valuation Officers) (Appellants), upheld a ruling of the Court of Appeal in November 2018; that cash machines within existing properties – whether internal or external facing – should not be subject to separate business rates bills, instead falling within the property’s overall existing rates liability.

The decision paved the way for their deletion from the Local Rating Lists triggering rebates of £428.69 million in reimbursement of erroneous bills dating back to 2010.

Edward H Chambers BSc.Hons, MRICS Senior Director, Altus Group

“

“

Retailers were left reeling after a decision in 2013 to charge separate business rates on ‘hole in the wall’ cashpoints, which had not previously affected their overall rates bill. Extra bills were sent to thousands of retailers in 2014 backdated to April 2010. This case closed a long and costly legal dispute which should never have been brought.

Tesco confirmed, in October 2020, as part of their half year results, that they had received a £105 million rebate. Further, given the case dealt with the question of paramount occupation, the same principles apply to photographic booths.

27

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Focus on Holiday Homes As part of the ‘Tax Day’ in March 2021, Government announced legislation to tighten tax rules for second property owners in England, meaning they can only register for business rates (and subsequently associated reliefs) if their properties are genuine holiday lets.

Owners of second homes in England who switched their holiday retreats to lets, taking advantage of the small business rates relief scheme - paying little or no property tax - have been entitled to grant funding worth £1.33 billion during the pandemic.

At the onset of the pandemic, holiday homes were entitled to grants in Spring 2020 - worth up to £552.23 million, in addition to top up grants worth a further £256.84 million in January 2021. ‘Restart grants’ available from 1st April 2021 provided further funding of up to £522.33 million.

Owners of holiday homes in England who make their properties available to rent for 140 days of the year, are currently entitled to claim 100% small business rates relief if their properties have a Rateable Value of less than £12,000; meaning that they pay no business rates and no council tax. Whilst for those holiday homes with a Rateable Value between £12,001 to £15,000, the level of rates relief is tapered gradually going down from 100% to 0%. The small business rates regime covers 96% of holiday homes. An extra 8,936 homes, in both England and Wales, were classified as holiday homes during the 2020 calendar year, having become commercial premises for the purpose of business rates.

The Government state the new criteria, yet to be published, will ensure that owners of properties in England who are not genuine businesses are unable to reduce their tax liabilities by declaring that a property is available for let while making little or no realistic effort to actually let it out.

In Wales, where rates are devolved, holiday homes are rated as a self-catering property and valued for business rates if both the following criteria is met: •

available to let for short periods that total 140 days or more per year and;

•

actually let for 70 days

28

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Businesses simply aren’t getting as much commercial and economic benefit from their offices as they did before the pandemic. Many offices are feeling very expensive right now from an overall cost benefit point of view. It was simply wrong to start to legislate against substantial and prolonged valuation corrections reflecting the impact that the pandemic has had on property.

Philip Emerick Rating Director, Altus Group

“

“

2021/22 Largest Ratepayers by Sector

Rateable Value 2017

Rates Payable 2021/22

Total Area (m2)

Goldman Sachs, 25 Shoe Lane, London

£26,720,000

£14,669,280

68,762.74

HSBC, 8 Canada Square, London

£26,240,000

£14,195,840

100,828.05

BBC, Broadcasting House 2-22, Portland Place, London

£24,720,000

£13,373,520

50,156.34

JP Morgan, 25 Bank Street, London

£23,120,000

£12,507,920

93,752.60

MHCLG, 2 Marsham Street, London

£22,700,000

£12,280,700

52,065.00

UBS AG, 5 Broadgate, London

£20,060,000

£11,012,940

63,113.98

Deloitte, 1-3 New Street Square, London

£19,450,000

£10,678,050

48,481.95

Credit Suisse, 1 Cabot Square, London

£19,420,000

£10,506,220

90,097.80

Citibank, 33 Canada Square, London

£19,260,000

£10,419,660

81,324.80

Amazon UK, 1 Principal Place, Worship Street, London

£18,030,000

£9,754,230

55,548.55

Top 10 Largest Office Liabilities

Source: Real Estate Adviser, Altus Group

The largest office liabilities are dominated by the financial institutions in the City of London, but banks, hedge funds and insurers are reviewing their physical footprint in the Square Mile because of the pandemic.

For example, HSBC stated that they will cut approximately 40% of office space globally, retaining the Canary Wharf-based headquarters and ending leases on other London locations when they expire. Excluding bank branches, HSBC has 154,692 m2 of office space across London, the equivalent space of 22 football pitches, with two thirds of that overall space within Canada Square.

29

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Rateable Value 2017

Rates Payable 2021/22

Total Area (m2)

Sellafield Limited, Sellafield Works, Sellafield, Seascale

£46,280,000

£24,722,687

68,762.74

Esso Refinery, Marsh Lane, Fawley, Southampton

£22,160,000

£11,545,360

100,828.05

Port Of Felixstowe, The Dock, Felixstowe Docks, Felixstowe

£21,270,000

£10,954,050

50,156.34

British Steel, Brigg Road, Scunthorpe

£19,490,000

£10,803,992

93,752.60

Tata Steel, Port Talbot Steelworks, Port Talbot

£16,880,000

£9,199,600

52,065.00

Ministry Of Defence, Whitehall, London

£16,540,000

£8,948,140

63,113.98

Land Rover Ltd, Lode Lane, Solihull, West Midlands

£15,150,000

£7,893,150

48,481.95

Devonport Royal Dockyard, Devonport, Plymouth

£13,260,000

£6,908,460

90,097.80

Phillips 66 Ltd, Eastfield Road, South Killingholme, Immingham

£11,740,000

£6,116,540

81,324.80

Essar Oil UK Ltd, Oil Sites Road, Ellesmere Port

£10,640,000

£5,543,440

55,548.55

Top 10 Largest Industrial Liabilities

Source: Real Estate Adviser, Altus Group

Refineries at Fawley, on the Humber and at Ellesmere Port as well as steelworks in Scunthorpe and Port Talbot dominate the industrial sites with the largest liabilities for the industrial sector.

Rateable Value 2017

Rates Payable 2021/22*

Total Area (m2)

Selfridges, 398-454 Oxford Street, London

£33,220,000

£17,972,020

104,256.50

Harrods, 87-135 Brompton Road, London

£32,120,000

£17,376,920

131,941.07

John Lewis, 278-306 Oxford Street, London

£19,910,000

£10,771,310

62,865.50

Debenhams, 334-338 Oxford Street, London

£10,370,000

£5,610,170

33,162.98

Marks And Spencer, 456-472 Oxford Street, London

£9,200,000

£4,977,200

29,054.49

Louis Vuitton, 17-20 New Bond Street, London

£8,560,000

£4,630,960

2,768.13

Ralph Lauren, 1-5 New Bond Street, London

£7,730,000

£4,181,930

3,587.47

John Lewis, 2-32 Kings Road, London

£7,670,000

£4,149,470

30,394.28

House Of Fraser, 308-322 Oxford Street, London

£7,580,000

£4,055,300

16,535.72

Marks And Spencer, 169-173 Oxford Street, London

£6,680,000

£3,613,880

16,611.00

Top 10 Largest Retail Liabilities

* before the application of the retail discount - the 3 month exemption period and capped relief.

Source: Real Estate Adviser, Altus Group

30

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Oxford Street accounts for 60% of the highest business rates liabilities with retailers and developers taking an “assertive approach” unlocking additional value through the conversion of excess retail space to reduce both rental and rates costs.

Marks and Spencer revealed plans for a 6 year, multimillion pound redevelopment of its flagship Marble Arch store at 456472 Oxford Street, with plans to demolish the existing 89 year old building and replace it with a 10-storey edifice, of which an M&S store would occupy three floors.

The John Lewis Partnership could convert almost half of its flagship Oxford Street store into office space, having been granted permission from Westminster City Council’s planning sub-committee in October 2020. As a result of that approval, if the third to eighth floor levels are occupied as office floorspace, a maximum of 28,135 m2 (45%) of retail floorspace would be converted to office use, of which 12,465 m2 was tradeable A1 floorspace.

Planning permission had previously been granted for Debenhams to convert the fourth and fifth floors at 334 – 338 Oxford Street to office space, and before the company’s administration the head office was relocated to occupy the space.

The top 10 largest ‘Other’ liabilities are occupied predominantly by travel and power infrastructure.

Rateable Value 2017

Rates Payable 2021/22**

Total Area (m2)

£212,830,000

£115,141,030

68,762.74

Gatwick Airport, Gatwick, West Sussex

£56,990,000

£29,691,790

100,828.05

Sizewell B Power Station, Sizewell B Power Station, Sizewell, Leiston

£36,000,000

£22,275,387

50,156.34

Heysham 2 Power Station, Heysham Power Station, Morecambe

£38,640,000

£20,131,440

93,752.60

Vodafone Fibre Optic Telecoms Network In England

£29,460,000

£15,348,660

52,065.00

The Channel Tunnel (Within The UK), Shakespeare Cliff, Dover

£28,000,000

£14,588,000

63,113.98

Manchester Airport, Manchester

£27,600,000

£14,379,600

48,481.95

Stansted Airport, Stansted, Essex

£24,520,000

£12,774,920

90,097.80

Francis Crick Institute, 1 Midland Road, London*

£20,500,000

£11,090,500

81,324.80

St Pancras International Station, Pancras Road, London

£20,000,000

£10,820,000

55,548.55

Top 10 Largest ‘Other’ Liabilities Heathrow Airport, Hounslow

* registered charity entitled to 80% mandatory relief ** before the application of The Airports and Ground Operations Support Scheme Source: Real Estate Adviser, Altus Group

Heathrow and Gatwick continue to top the overall list of the individual sites with the highest business rates liabilities, with business rates support capped at just £4 million from 1st April for 6 months. Other airports, together with travel infrastructure such as the Channel Tunnel and St. Pancras International, also dominate the list.

31

Pubs Calling Last Orders Fall In 2020 During the 2020 calendar year around 37 pubs a month ‘vanished’ from the English and Welsh communities that they once served, having called last orders for the final time. Down 6% on 2019 despite the pandemic.

The overall number of pubs in England and Wales liable for business rates, including those vacant and being offered to let, fell to 40,617 on 31st December 2020 down 446 compared with 41,063 on 31st December 2019.

Pubs which have ‘vanished’ have either been demolished and/or converted into other property types, such as homes and offices, with the rate also down 51% on the 914 in 2018.

England & Wales 31st December 2020

Pub Numbers

Pubs Lost

40,617

446

31st December 2019

41,063

473

31st December 2018

41,536

914

31st December 2017

42,450

-

Source: Real Estate Adviser, Altus Group

Pubs in England and Wales received a 1 year business rates ‘holiday’ worth £768.12 million for 2020/21 and were eligible for £557.94 million in grant funding worth either £10,000 or £25,000 per pub at the start of the pandemic.

“

“

Pubs bore the brunt of COVID-19 restrictions in 2020, but proved remarkably resilient aided by Government interventions such as furlough, grants, rates relief and liquidity in the form of cheap loans helping keep the ‘pilot light’ on.

At the start of 2021 top up grants linked to business rates were provided to further help closed retail, leisure and hospitality businesses negate the continued economic impact of the third national lockdown.

Payments of £4,000 were made available for businesses with a Rateable Value of £15,000 or less, £6,000 for businesses with a rateable value of between £15,000 and £51,000, and £9,000 for businesses with a rateable value of more than £51,000 providing an additional £239.14 million in support.

Restart grants have also been provided - see pages 16 to 18.

Top 10 Council Areas For Pub Top Up Grants Council

Pubs

Support £

Cornwall Council (Unitary)

593

£3,398,000

Westminster City Council

379

£3,188,000

Leeds City Council

467

£2,865,000

Liverpool City Council

452

£2,775,000

Wiltshire Council (Unitary)

475

£2,548,000

Birmingham City Council

384

£2,539,000

Manchester City Council

371

£2,404,000

Sheffield City Council

400

£2,402,000

Shropshire Council (Unitary)

422

£2,288,000

Durham County Council

442

£2,225,000

Source: Real Estate Adviser, Altus Group

32

Feature on Big Sheds At the start of the 2021 calendar year, there were a total of 1,402 Large Distribution Warehouses widely known as Big Sheds, those with a total area of more than circa 8,000 m2.

Total Area m2

Count

200,000 m +

3

150,000 m2+

6

100,000 m2+

31

50,000 m +

145

2

25,000 m +

335

Less Than 25,000 m2

882

2

2

Source: Real Estate Adviser, Altus Group

300

281

265

200

192 154

146

100

134

104

50

79

South West

London

Yorkshire/Humberside

South East

East

North West

West Midlands

0

27

20 North East

150

Wales

250

East Midlands

Number of Large Distribution Warehouses

Number of Big Sheds By Region

Source: Real Estate Adviser, Altus Group

33

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Big Sheds currently occupy a total area of 38.67 million m2, the equivalent space of around 5,416 football pitches, with the average size of a Big Shed being 27,585 m2.

Big Shed Total Area m2 by Region 9,207,380

East Midlands 6,478,641

West Midlands

5,366,865

North West

4,322,691

East

4,216,382

Yorkshire/Humberside

3,693,134

South East 2,400,965

South West

1,437,835

London Wales

841,191

North East

708,396 0

2,000,000

4,000,000

6,000,000

8,000,000

10,000,000

Source: Real Estate Adviser, Altus Group

Spanning from Northamptonshire up the M1 to East Midlands Airport, and West as far as Tamworth area, the ‘Golden Triangle’ in the East Midlands is home to 9.21 million m2 of Large Distribution Warehouse space – 23.8% of all space in England and Wales.

More than 10% of all ‘Golden Triangle’ Big Shed space, 976,504 m2 in total, is at Magna Park in Lutterworth - widely regarded as Europe’s premier logistics location.

Just 2 of the 10 largest Big Sheds are occupied by big-name pure play ecommerce retailers, although Amazon occupy 1 of the 3 units that are more than 200,000 m2.

Sports Direct Warehouse at Shirebrook is the largest of all by some 27,974 m2.

34

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Top 10 Largest Big Sheds

Total Area (m2)

Sportsdirect, Brook Park, Meadow Lane, Shirebrook, Mansfield

240,056

Next Plc Units 2 & 3, Brookfields Park, Wath Upon Dearne, Rotherham

212,082

Amazon UK London Distribution Park, Windrush Road, Tilbury

201,899

Ford Motor Company Ltd, Royal Oak Way South, Daventry, Northants

179,091

M & S Distribution Centre, Arundel Avenue, Castle Donington

175,780

Dixons Carphone Group, Newlink Business Park, Long Hollow Way, Newark

168,789

Neovia Logistics, Peckleton Lane, Desford, Leicester

161,162

John Lewis Distribution Centre, Fen Street, Magna Park, Milton Keynes

160,451

Next Plc, Elmsall Way, Dale Lane, South Elmsall, Pontefract

150,930

Boohoo.com UK Ltd, Widow Hill Road, Burnley

145,988

Source: Real Estate Adviser, Altus Group

The combined Rateable Value for all Large Distribution Warehouses (under Scat Code 151) is £1.65 billion, with business rates liabilities for the 2020/21 financial year of £861.78 million.

All non-domestic property is valued on the same premise - the rental value. However, some property does not trade and therefore an alternative method is used to obtain a hypothetical rent. Big Sheds trade in a rental market, so an estimate by the Valuation Office Agency of the open market rent on 1st April 2015 determines rates liabilities until the next Revaluation which comes into effect on 1st April 2023.

Rateable Value 2017

Rates Payable 2020/21

Tesco Distribution Centre, Imperial Way, Reading

£7,640,000

£3,980,440

Amazon UK London Distribution Park, Windrush Road, Tilbury

£7,080,000

£3,688,680

John Lewis Distribution Centre, Fen Street, Magna Park, Milton Keynes

£7,060,000

£3,678,260

B & Q Regional Distribution Centre, Milne Way, Swindon

£6,730,000

£3,506,330

The Range, Western Approach Business Park, Severn Beach, Bristol

£6,530,000

£3,402,130

Royal Mail Distribution Centre, Axis Park, Sutton Lane, Slough

£6,170,000

£3,214,570

Sportsdirect, Brook Park, Meadow Lane, Shirebrook, Mansfield, Notts

£6,160,000

£3,209,360

Sainsbury's Distribution Centre, Fleming Road, Waltham Abbey, Essex

£5,830,000

£3,037,430

Waitrose Ltd, Doncastle Road, Bracknell

£5,790,000

£3,016,590

WM Morrison, G-Park, Fleet End, Sittingbourn

£5,780,000

£3,011,380

Top 10 Most Valuable Big Sheds For Rates

Source: Real Estate Adviser, Altus Group

35

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

The average business rates bill during 2020/21 for Large Distribution Warehouses was £614,677, based upon an average Rateable Value of £42.66 per m2 - although that cost rises considerably for logistics and ground handling close to Heathrow Airport.

Top 10 Most Valuable Big Sheds By £/m2

Rateable Value £/m2

Expeditors International, 1 Ascot Road, Feltham

£157.84

Panalpina World Transport, Great South West Road, Feltham

£137.53

Gate Gourmet, Prologis Park, Stockley Road, Hayes

£135.94

Dnata Catering Services, Northumberland Close, Staines-Upon-Thames

£131.74

Unit A Prologis Park, Stockley Road, Hayes, Middx

£129.30

DHL Global Match, Hurricane Way, Axis Park, Langley, Slough

£129.17

Amazon UK Prologis Park, Stockley Road, Hayes, Middx

£126.85

Adelie Foods, Prologis Park, Stockley Road, Hayes*

£125.10

Toll Global Forwarding, Heron Way, Feltham, Middx

£123.61

Costco, Hanworth Road, Sunbury-On-Thames, Middx

£ 123.52

*company went into administration and ceased trading Source: Real Estate Adviser, Altus Group

Occupiers of the 100 biggest Large Distribution Warehouses, by way of total area m2, account for 10.05 million m2 - around a quarter - of all Big Shed floor space.

Occupiers of The 100 Biggest Sheds

10% 11%

17%

Omnichannel Retail

Pure Play Ecommerce

62%

Logistics

Manufacturing

Source: Real Estate Adviser, Altus Group

36

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

The Growth of New Big Sheds During the 2020 calendar year, a total of 1.37 million m2 of new shed space came onto the Local Rating Lists in England and Wales, with 50 new Big Sheds contributing £32.68 million in business rates during 2020/21.

The largest Big Shed to come onto the Local Ratings during 2020 was the Amazon Fulfilment Centre in Kegworth at 132,029 m2.

Whilst B & M Retail’s, distribution centre at Wixams (Bedford), was the largest individual Rateable Value addition to the Local Rating Lists at £5.55 million during 2020.

Region

Count of Properties

Sum of RV 2017

Sum of RP 2020/21

Sum of Total Area (m2)

Sum of Average £/m2

East

10

£14,520,000

£7,531,620

257,154

£56.46

East Midlands

15

£21,494,500

£11,196,445

563,838

£38.12

North West

6

£6,662,500

£3,471,163

148,284

£44.93

South East

4

£9,135,000

£4,759,335

174,515

£52.35

South West

2

£1,185,000

£617,385

16,503

£71.80

Wales

1

£322,500

£173,505

5,467

£58.99

West Midlands

7

£3,861,000

£2,011,581

83,195

£46.41

Yorkshire/Humberside

5

£5,610,000

£2,922,810

123,818

£45.31

50

£ 62,790,500

£32,683,843

1,372,774

£45.74

Grand Total

Source: Real Estate Adviser, Altus Group

The East Midland’s ‘Golden Triangle’ saw an increase of 563,838 m2 of new Big Shed floor space during 2020, double that of the next region, the East of England, at 257,154 m2. Both areas combined accounted for 60% of all new space.

More than a third of all new space in the East Mindlands which entered the Local Rating Lists, 199,756 m2 in total, was in Corby.

Dutch company, NewCold, is currently working on a 59,000 m2 fully automated cold storage warehouse in Corby with the first pallets going through the door later in 2021, its largest in Europe.

Taxation of Warehouses The Chief Executive of Next suggested that business rates for retailers on the high street should be cut by 35% with the commercial property tax increased by 50% for warehouses.

If this suggestion was intended to push the rates burden onto big-name pure play ecommerce businesses then it is misguided.

Big-name online only retailers represent only a small part of the overall warehouse occupier base.

For example, Amazon UK occupies just 3.14% of all Large Distribution Warehouses in England and Wales accounting for 5.15% of all space currently paying 4.98% of the overall rates liabilities.

37

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Amazon Large Distribution Warehouses*

Rates Payable 2020/21

Total Area (m2)

L C Y2 Unit 2, London Distribution Park, Windrush Road, Tilbury

£3,688,680

201,899

Unit 1, Wilders Way, Kegworth, Derby

£2,469,540

132,029

Unit 4 Central Avenue, Severn Beach, Bristol

£2,771,720

131,393

Units Dc1 & Dc2 Prologis, Boscombe Road, Dunstable, Beds

£2,459,120

112,256

Unit 1, Iport Avenue, New Rossington, Doncaster, South Yorkshire

£2,099,630

104,575

Unit 1, Orion Boulevard, Great Sankey, Warrington

£1,344,180

102,980

Unit 1, Robson Way, Ellistown, Coalville, Leics

£2,438,280

99,584

£984,690

86,649

Gazeley Park, Lea Hall Way, Brereton, Rugeley, Staffs

6, Sunbank Lane, Airport City, Manchester

£1,437,960

85,014

Ffordd Amazon, Crymlyn Burrows, Swansea

£1,035,500

77,605

Bhx4 At 71, Sayer Drive, Allesley, Coventry

£1,505,690

76,173

Unit 2, Flaxley Road, Kingston Park, Peterborough

£1,177,460

69,683

Unit 8, Badgers Rise, Prologis Park Marston Gate, Brogborough

£1,547,370

67,658

Boundary Way, Hemel Hempstead, Herts

£1,573,420

56,030

High Hazels Road, Barlborough Links, Barlborough, Chesterfield

£1,052,420

49,144

Unit 1, Balby Carr Bank, Doncaster, South Yorkshire

£844,020

38,904

Unit E1, Hulton Heys Way, Bolton

£797,130

35,414

Unit 1, Moore Park Way, Haydock, St Helens, Merseyside

£817,970

33,626

Unit 10, Poplar Way East, Avonmouth, Bristol

£896,100

31,188

£1,271,240

29,562

Royal Oak Way North, Daventry, Northants

£750,240

28,519

Interlink Way South, Bardon Hill, Coalville, Leics

£682,510

23,854

Unit 3, Water Vole Way, Doncaster, South Yorkshire

£510,580

23,174

Sir Stanley Matthews Way, Stoke-On-Trent

£422,010

20,468

Unit 1, Ontario Drive, New Rossington, Doncaster, South Yorkshire

£419,405

20,023

Unit 20, Woodside Road, South Marston Industrial Est, Swindon

£408,985

19,898

Unit 3, Waver Way, Rugby, Warwickshire

£536,630

17,799

Unit 3, Flaxley Road, Kingston Park, Peterborough

£354,280

17,574

Union Square, Fifth Avenue, Trafford Park, Manchester

£375,120

16,433

Building 3.1 A/B Red Rose Drive, Lancashire Business Park, Centurion Way, Farington, Leyland, Lancs

£333,440

16,425

Unit 3, Noral Way, Banbury, Oxon

£453,270

15,826

65, Stockingswater Lane, Enfield, Middx

£811,500

15,737

Unit 2, Saxon Avenue, Grange Park, Northampton

£432,430

15,264

Swallowdale Lane, Hemel Hempstead, Herts

£562,680

15,181

Unit B Prologis Park, Twelvetrees Crescent, London

£627,560

13,294

Unit 2 Tower Thurrock, Oliver Road, West Thurrock, Grays, Essex

£395,960

11,560

Unit 6, Ontario Drive, New Rossington, Doncaster, South Yorkshire

£227,938

11,173

Venus 110, Horn House Lane, Liverpool

£220,123

10,254

Unit 1 Gateway Park, Christopher Martin Road, Basildon, Essex

£309,995

10,241

Unit C, Prologis Park, Stockley Road, Hayes, Middx

£484,195

9,335

New Aquitaine House, Exeter Way, Theale, Reading

£435,035

8,526

Unit 1, Exeter Logistics Park, Werstan Road, Clyst Honiton, Exeter

£328,230

8,419

Unit 1, Invicta Park, New Hythe Lane, Larkfield, Aylesford, Kent

£302,180

8,301

Unit A 100, Vickers Drive, Brooklands Industrial Park, Weybridge

Units A B & C, Graviton Park, Belvedere, Kent

£354,355

7,056

£42,950,770

1,985,697

* As per the Local Rating Lists on 1st January 2021

A 50% increase on Amazon’s warehouses would increase rates liabilities by £21.47 million increasing the estimated rates to turnover ratio by only 0.11%.

38

Empty Rates In the 2007 Budget report, the Government’s intention was to modernise business rates in respect of empty properties. The purpose of reform was to enhance the supply of commercial property available to new and existing businesses.

The Rating (Empty Properties) Act 2007, which received Royal Assent in July 2007, raised the rates liability for empty commercial properties from 50% to 100% of the basic occupied rate, following an initial 3-month rate-free period, extended to 6 months in the case of industrial properties such as warehouses which had previously been entirely exempt.

The 2008 empty rates changes were essentially a penalty; with the aim to expediate property occupation. The legislation is punitive for those Landlords who, despite their best endeavours, are unable to let their buildings within the short duration of the current period for relief.

The proliferation of e-commerce, shifting consumer preferences and high street cost pressures have all led to an oversupply in retail space. The acquisition of the Debenhams and Arcadia brands, for example, saw all 562 stores totalling 1,389,137 m2 of retail floor space, the equivalent of 194 Premier League football pitches, across the UK coming vacant and to-let.

Landlords will potentially have to face annual empty rates of circa £50 million for Debenhams and £91 million for Arcadia Group stores following the exemption period, unless new tenants can be found quickly once possession was taken back.

Edward Searle, BSc, MRICS Vice President, Altus Group

“

“

The Government must urgently recognise that the current 3 and 6 month exemption periods are woefully inadequate to allow commercial properties to be refurbished and/or repurposed, marketed and relet. It is through that redevelopment and refurbishment that the real estate industry adds most value to the UK economy.

Landlords have been almost entirely overlooked by Government support measures during the pandemic, despite being asked to play a supportive role.

The business rates ‘holiday’ for retail, leisure and hospital premises did not cover those properties vacant and to-let, and that exclusion left Landlords with estimated empty rates liabilities of £924 million in England and £25 million in Wales during 2020/21.

39

ANNUAL BUSINESS RATES REVIEW AUGUST 2021

Supreme Court Rules On SPV Schemes The 2008 empty rates changes led to a proliferation of questionable business rates avoidance schemes, culminating in a long running battle between Local Authorities and landlords. In this respect, a significant judgment was handed down in May 2021 by the UK Supreme Court in Hurstwood Properties (A) Ltd and others (Respondents) v Rossendale Borough Council and another (Appellants).

The business rates avoidance schemes, in the above cases, involved granting a short lease of unoccupied properties to a special purpose vehicle (“SPV”), such that the SPV became the “owner” for the purpose of non-domestic rates liabilities rather than the respondent company. The SPV was subsequently dissolved or put into liquidation, escaping business rates liabilities levied on empty properties.

The appeal concerned whether the appellant local authorities, Rossendale Borough Council and Wigan Council, had reasonable grounds for claiming non-domestic rates from the respondent companies which were the registered owners of various unoccupied commercial properties.

The local authorities’ claims were test cases representative of 55 similar cases where the value of unpaid rates varied from a few thousand to millions of pounds.

The Supreme Court held that neither the dissolution nor the liquidation scheme had any business or other ‘real world’ purpose - their sole purpose was to avoid liability to pay business rates. The SPVs had no assets or business, and it was never intended that the empty rate would ever be paid. The lease included a rent clause, but it was not intended that the rent would be demanded or paid.

The dissolution scheme involved letting the SPV incur a liability for business rates (but not paying it) before it was dissolved under the Companies Act 2006. Upon dissolution, the SPV’s property passed to the Crown as bona vacantia and the Crown became liable for the rates as owner. The scheme relied on the local councils not finding out about the dissolution until long after it had occurred.

The liquidation scheme involved placing the SPVs in voluntary liquidation shortly after granting the lease to trigger regulation.

The liquidation was artificially prolonged to maintain the existence of the SPVs and therefore the exemption from business rates.

The dissolution scheme was held by the Supreme Court to be an abuse of legal process through the way in which the SPV liability for rates was handled and may also have involved unlawful conduct by the directors. The liquidation scheme was declared to be an abuse of the insolvency legislation.

As a result, the Supreme Court ruled that there was a triable issue whether the respondents remained liable for business rates throughout the duration of the leases.

“

“

Our long term and unwavering advice to clients was always to avoid such schemes.

No one likes empty rates which is, in effect, a tax on the absence of income. If the tax was more affordable, owners wouldn’t have been forced into finding complicated ways to try and mitigate their liabilities.

Robert Hayton BSc (Hons), MRICS

President, UK Business Rates

40

2020 Case Law Review Phil Ray, BSc MRICS, takes a look at a number of the more notable cases litigated through the Court system in the past year, testing both the interpretation of legislation and established precedents.

In Hughes v. Exeter City Council the Lands Chamber carried out an extensive review of the underlying principles and held that there was no principle that prevented the receipts and expenditure method from being used for buildings occupied other than for profit where the circumstances and the evidence justified it.

The Court of Appeal subsequently refused permission to appeal the ruling in favour of Exeter City Council over the rateable valuation of the city’s Grade II-listed Royal Albert Memorial Museum & Art Gallery which was reduced from £510,000 to a nominal £1.

“The Valuation Office claimed that the ruling could see billions of pounds of Rateable Value removed from public buildings.

But museums are regarded as essential for socio-economic benefits rather than as profit making facilities, particularly by local authorities. They are frequently operated from listed buildings. In short, for most museums, no-one would pay a positive rent in an open-market letting.”

The Supreme Court in Cardtronics UK Ltd and Others v Sykes and Others (Valuation Officers) unanimously upheld the decision of the Court below in favour of the ratepayers concluding that although the site of an ATM is capable of being a separate hereditament, the host superstores and shops had retained sufficient control of the sites, and consequently they remained part of the host hereditaments.

“This was a victory for common sense but then presented a significant logistical exercise involved in undoing the consequences of the Valuation Office Agency’s decision to separately rate ATM machines, although that appears to be coming to an end.”

Southwark London Borough Council v Ludgate House Ltd and Another. The Court of Appeal held that an office building occupied by property guardians, pending redevelopment, remained a single hereditament for rating purposes with the property owner remaining in rateable occupation of premises.

“This case will have significant implications for the efficacy of guardian schemes.”

Stock Auto Breakers Ltd v Sykes (Valuation Officer) posed the question whether new evidence was admissible at the Upper Tribunal (Lands Chamber) under Check Challenge Appeal regulations and was the first appeal under the CCA regulations to be heard. The tribunal confirmed it was not bound by Reg 17A of the 2009 Procedure Regs as this only affected proceedings at the Valuation Tribunal so fresh evidence put forward by the parties was admissible although Upper Tribunal Rule 16(2)(b)(iii) does allow the Tribunal to exclude evidence that would otherwise be admissible where it would otherwise be unfair to admit.

“If applied wisely, the decision paves the way for new evidence to be successfully introduced.”

41

Contact Us:

0800 023 5310 property@altusgroup.com

altusgroup.com/property

42