The Momentum for change in the Rating world
Barely a week goes by, or so it seems, without me reading another piece in the newspaper or online about individuals, trade bodies, MP’s or Surveying Practices commenting about the need for change in the rating world.
What’s the problem then? The problem is the ‘Great Recession’, the period between 2008 and 2012 pretty much ‘re-drew’ the value map of commercial property across the UK. The effect of recession saw the retail industry particularly badly affected, values distorted from where they had been pre 2008.
The problem is that without a rating revaluation – the assessment of value on which the rating tax is levied it means that huge swathes of property; particularly in town centres, are paying an unsustainably high level of rating tax. In turn the problem manifests itself that properties become uneconomic to occupy and the issues get worse.
Last week I saw that the British Property Federation (“BPF”), an organisation devoted to representing the interests of all those involved in real estate ownership and investment, made another call for ‘rates overhaul’.
It follows the publication of the British Retail Consortium’s Manifesto Milestones which highlights the threat that the current business rates system poses to business as a whole. It also calls for business rates to flex with the overall economy, which the BPF particularly agrees with.
In its response to the Treasury’s recent Administration of Business Rates consultation, the BPF called for the abolition of the retail price index escalator.
The BPF argued that its use has meant that business rates had been rising at a rate “completely out of sync” with economic conditions. It recommended that business rates should instead be pegged to rental values, as these are a proxy for the overall health of the economy.
In addition, the BPF has warned that the inevitable squeezing of rents eventually harms new investment and development activity in the real estate industry.
From my point of view it’s not so much change but rather a case of doing what should be done, that is needed. By this I mean the Rating Revaluation.
Postponed until 2017 it should be pulled forward as soon as practicable.
Assessing taxes based on up to date values has to be the fair and equitable way for ‘change’, better to describe as ‘properly updating the tax base’.
For advice on Rating contact one of the Rating Team at Harris Lamb on 0121 455 9455.