Kilpatrick & Co logo
Chartered Surveyors


news article image

Last month I attended the National Rating Day Conference in London, where amongst the distinguished panel of speakers were representatives from MHCLG, the Chief Valuer of the Valuation Office Agency, and the President of the Lands Tribunal/Upper Chamber. One of the most striking presentations was from the Head of Property of River Island, whose paper on the impact of business rates on the retail sector ought to be compulsory reading for those in charge of the business rates system. Based on research into the rates burden being experienced by a number of large name retailers, the survey highlighted the significant number of properties within the retailers’ portfolios where the rates burden exceeded the rent being paid to landlords. The survey also highlighted the impact of downwards transition, which means many high street shops are still paying rates based on 2008 rental values, prior to the recession, since when many high street rents have fallen by 50% or more. This unfair burden is exacerbated by the severe downwards transition penalty for larger shop properties. Tellingly, the MHCLG said they were aware of the impact of the new transitional system when it was introduced in 2017! In my view, how anyone can justify softening the rates burden on prime retail locations in London, occupied typically by retailers more likely to be able to afford high rent and rates and expecting the regions, in particular the north, to fund this concession through heavy transitional surcharges is beyond me! The unfair transitional surcharges are forcing further closures of large shop properties throughout the country, just at a time when the high street needs all the help it can get. The plea from River Island’s director was for the abolition of downwards transition, which I have been arguing for, for over two years, also. He also called for a freeze in the UBR, and urgent correction to the current unworkable check challenge appeal system and the long term reform of the whole business rates system. However, with preparations for the 2021 Rating Revaluation well under way it seems that the Government will have a transitional system again for 2021 onwards. So with a Government preoccupied with Brexit and desperate for tax income, I suggest its best not to hold your breath for significant changes to the current business rates shambles, unfortunately! 20/6//2019