Welcome relief or a lengthy sentence on retailers?
New research was released last week, predicting that some Midlands retailers are likely to see a welcome reduction in business rates. But before companies get excited and start mentally spending their extra cash, it’s not quite as positive as it sounds.
Retailers in many parts of the West Midlands may see their bills fall dramatically, when new Rateable Values are introduced in April 2017 as part of the Government Business Rates Revaluation. Those businesses in Tamworth could see a fall of up to 56 per cent while businesses in Northfield, Kings Heath, Bromsgrove and Kidderminster are also likely see a big improvement with savings of more than a third.
However, businesses are going to have to wait more than 18 months before these potential reductions kick in, meaning they’ll be counting the cost in the interim thanks to the Government postponing the Revaluation which was due to commence on the 1st April of this year.
Essentially, this means that an already tough five-year cycle was extended by two years, putting immense pressure on businesses and seeing many fail as they struggled to keep their heads above water.
The Rateable Values that are the current basis for retailers bills reflect levels of value from April 1st 2008, when the retail world was a much different place, so while the 2017 Revaluation will help to re-balance Rateable Values by adopting a valuation date of 1st April 2015, there are months of difficulty ahead.
If it was ‘business as usual’ in the world of Business Rates and the 2015 Revaluation had gone ahead, retailers rates bills would already reflect the down turn seen in the rental market. But as it stands, they face a further 18 months of financial pressure before the new Rates are applied in April 2017.
The good news is that the Revaluation will reflect the High Street trends that have proved so challenging to traditional retailers, such as the continued march of the Internet Retailers and Out of Town shopping centres.
The expected reductions in Rateable Value will allow some breathing space for struggling retailers and maybe allow them to begin the fight back. It’s just a shame it’s going to take them so long to start that fight.
We can only hope that subsequent reviews of the system work in businesses’ favour, with shorter cycles to reflect changes within the industry, rather than lengthy sentences being placed on those who may not survive long enough to see them implemented.