Many businesses and organisations that are looking for commercial premises to rent seem to have some awareness of the new Rating List provisions for Small Businesses, which will become effective from 1st April 2017.
We always expected that it would be a huge selling point for occupiers that those premises with new Rateable Values under 12000 in the 2017 List will benefit from 100% Small Business Relief. This is double the current threshold in the 2010 /current Rating List.
In some cases rateable values for the new List have declined slightly compared with the current List. This is because they are loosely based on market rents at the relevant valuation date (1st April 2015).
There have been varying trends in market rentals in different locations since the 2010 rating list was published, but in many cases, those rents have remained static or declined somewhat. The retail and office sectors have generally been harder hit by the credit crunch than the industrial sector, but it would be wrong to over-generalise. For instance, there are some major growth areas around the west side of central Leeds where rentals have increased significantly in the past year or two.
There is now more than hitherto a good case for sub-dividing larger assessments into smaller lettable units, so that commercial Landlords can generate the savings in business rates for smaller tenants, which will assist in attracting early occupiers for those Premises.
Another factor that has come to light is that the Government are said to be disallowing rate appeal reductions in the 2017 List where the reduction identified is 85% or more of the original published Rateable Value in the List. Is this a deliberate ploy to stop appeals being submitted with the aim of gaining a reduction to below the new 12000 Rateable Value threshold? Given that in many instances the reduction in Rateable Value achieved in negotiations is no more than 15% this does seem unfair and unreasonable. Let’s hope that the current campaign by the British Retail Consortium to mitigate the worst effects of the new Revaluation will tackle that issue.
An announcement about business rates mitigation is anticipated in the Chancellor’s Spring Budget Statement due next month.
Further reading: Ministers expected to soften impact of business rate changes
For those Landlords with larger units in their hands, there is the ability to enter into short-term tenancies with charitable arts groups whereby the occupier gains rent-free status and gains back for the Landlord the majority of the unoccupied rates it would have been paying. This at least gives the Landlord a breathing space during which time the Premises can be fully marketed and hopefully, with the help of a pro-active agent, a longer term letting secured at a market rental.
For more information about these rating issues contact Andrew idle Associates on 01274 743884 or email: firstname.lastname@example.org