Ken Whittington, Director and Head of Rating provides an update on recent developments within rating.
In just over 6 months time the new Rating List comes into force on 1 April 2010. At that stage all commercial non domestic properties will be given a new rating assessment by the Valuation Office (VOA).
The revaluation covers England, Wales and Scotland and is based on the analysis of rental evidence which the VOA has been undertaking over the course of the last two years and will form the basis upon which the new rating list has been calculated. It is hoped that the draft Rating List will be published in the near future, allowing businesses and surveyors alike to see the outcome of the VOA’s analysis and ascertain the impact this will have on rating liabilities.
The five year revaluation process is not new to the UK. Following a long gap during the 1970’s and 1980’s the Government of the day brought in a 5 year cycle which has been with us since the 1990 list. Any tax which is based upon property values needs to be re-assessed to reflect the changes in rental values throughout different commercial sectors and throughout different parts of the country.
The new list which fully comes into effect on 1 April next year will be based upon open market rental evidence as at 1 April 2008, which coincides with the time that the credit crunch took effect leading to the difficult economic situation we find ourselves in today. This in itself leads rating surveyors and businessmen alike to contemplate how the VOA will treat the poor state of the property market at that stage and we eagerly await the publication of their new valuations.
It is expected that a considerable number of rateable values will actually increase from the previous assessments which were based upon rental evidence in 2003. Five years is of course a long time and certainly throughout the beginning of this period rents were on the increase and it will be interesting to see how the VOA has interpreted the decline in rental evidence from late 2007 onwards. Certainly, retailers throughout the UK will be fully investigating the Draft List when it is published to see how this works its way through into new rating accounts for 2010/2011. In addition, assessments for large industrial complexes such as chemical works, which are mainly based on a valuation derived from costs for buildings and plant will potentially see large increases.
As with any revaluation, there will always be winners and losers and it is hoped that the Government’s Transitional Relief Scheme will be both fair and reasonable to ratepayers.
When the list is finalised, if Rateable Values increase substantially, the government will no doubt make a proportional adjustment to the rate in the pound multiplier (uniformed Business Rate) which should help to reduce the impact of higher assessments. However the increase in Rating Valuations will inevitably vary between different sectors and locations. The retail sector in particular has suffered from the market downturn and therefore any increase in rates liability will be strongly resented by retailers.
Of course, 1 April 2008 is also the date that the Government decided to abolish empty rating relief. During the last two years occupiers and developers alike have taken steps to minimise the affects of this new legislation. This includes the temporary re-occupation of property to allow a further void period to be claimed and accommodation being left in a state of disrepair or even demolished to avoid this piece of legislation. Whilst the Government’s aim was to bring an increased amount of accommodation to the market there has been very little evidence of this resulting in a higher level of actual lettings or sales.
Clients old and new are welcome to contact our Rating Team to seek advice for the forthcoming Revaluation. The first step will be to analyse the new draft valuation figures and then to be prepared for when the new assessment comes into effect from next Spring. Only then will appeals challenging the new level of assessment be accepted. Of course we now only have until 31 March 2010 to challenge current Rating valuations and therefore, if you have not already challenged your assessment, there is no time like the present to ensure your current liability is fair and reasonable.
We can offer a service which provides rating advice not only for the forthcoming list but also the current 2005 assessments. It is important to remember that the new Rating List remains with you until 2015 so swift action is required in the near future to ensure that your position is safeguarded over the next five years.
Please contact Ken Whittington or Peter Marshall on 0113 243 0101 for an informal discussion and advice regarding your rating liability or click here to view more information or email your enquiry.