Business rates remain one of the greatest challenges to the revival of British retail, new data from the British Council of Shopping Centres (BCSC) and Colliers International has shown.
At present, business rates are based on the notional rental valuation as of 2008 (pre-credit crunch), which have dropped by as much as 40% in some cases, meaning many retailers and businesses are paying rates disproportionate to the value of their units.
Many retailers were holding out for a revaluation due in 2015 – however, the Growth and Infrastructure Act 2013 will now delay the revaluation of business rates until 2017.
Analysis of data available from Colliers International has revealed that among those towns set to lose out the most as a result of the revaluation delay are a significant number of the Portas Pilot Towns – 27 towns singled out by Government for additional funding and assistance.
According to the BCSC, the decision to not take action on business rates is likely to have a disastrous impact on most of the Pilots which the Government has tried so hard to help.
Of the 15 Pilots data is available for, 13 will be worse off as a result of postponing the revaluation. The substantial fall in rental values in many Portas Pilot Towns would have meant dramatically reduced rates at the 2015 revaluation.
Stockport, for example, has experienced a decline in rental values of 29% over the same period, meaning businesses in Stockport are likely to be paying well over the odds in terms of business rates.
Conversely, Soho and Oxford Street have seen an increase in rental of values of 11.5%, meaning effectively depressed northern towns are subsidising more prosperous southern high streets.
The situation in many towns and cities becomes even worse when you look at vacancy levels – Stockport currently has vacancy levels of around 27.7%, with prospective retailers put off by increasingly disproportionate business rates.
Edward Cooke, director of policy and public affairs, BCSC, comments: “The Government has really failed to engage on the issue of postponing the revaluation of property with regard to business rates. With one hand the Government gives to these high street initiatives, but by failing to recognise the impact of postponing the revaluation, they take with the other hand.
“The Chancellor’s refusal to address the impact of business rates rises in the Budget may have signalled the end for many retailers. Perhaps even more worryingly, would-be retailers are being put off by the tax burden. The impact of Government initiatives such as Portas is going to be undermined unless there are substantial changes to the business rates regime.”
