London retailers hammered – Bond Street up as much as 80%, Selfridges & Harrods 50%
Northern high streets the big winners: falls of up to 56% in Bolton & Oldham
Jerry Schurder: “Unacceptable that retailers have just six months to deal with huge rises”
But transitional scheme means some stores will NEVER pay correct amount
“Madness that some retailers will never see the benefit they are due”
Central London retailers are facing a hammering as a result of today’s business rates revaluations – with increases in liabilities of up to 80% – while high streets in the Midlands and the North are the big winners, according to analysis by business rates specialist Gerald Eve.
The Valuation Office Agency (VOA) has today published new rateable valuations applied to each of the 1.85 million commercial properties in England – revealing huge disparities between winners and losers when the bills come into effect from April 2017 onwards. Among the notable changes to rates assessments are:
- Bond Street’s luxury retailers feeling the pain – Victoria’s Secret will see an increase of 80%
- Selfridges, Harrods and John Lewis (Oxford Street) all facing rise of 50% or more
- Regent Street seeing major surges – Hamleys up 67%, Apple Store up 30%
- Bolton, Oldham & Blackpool shops to see drops of up to 56%
- Swathes of North West to see significant falls: Stockport 50% down, Rochdale 39%
Jerry Schurder, head of business rates at Gerald Eve, said: “These huge swings in rates liabilities put into sharp focus the differing fortunes of retailers across the country, with many now facing punitive rises or much-anticipated falls. Those seeing massive increases have just six months to work out how they will meet these new business rates bills , with an obvious potential impact on jobs and the disposal of unviable locations.
“For those retailers seeing big decreases, the new valuations illustrate just how out-of-kilter recent rates bills have been for those struggling the most, highlighting how the worst-affected high streets have been subsidising their better off counterparts for some time. They should have benefited from lower bills 18 months ago, but the unfair postponement of the 2015 revaluation stretched their pain out for a further two years, and they have every right to question the suitability of a system that has penalised them in this way.”
The impact of the revaluation is magnified by the Government’s controversial transitional relief proposals, under which larger properties whose values have fallen will see bills reduce by just 4.1% in the first year: for example, Superdrug on Deansgate in Bolton should see its liability fall from £141,645 currently to £73,440, but under the transitional arrangements will have to pay £136,919 during 2017/18.
Worse, the structure of the preferred transitional arrangements means that some stores will never see the full benefit of their decreased bills. With reductions phased in on such a shallow trajectory, large stores such as the aforementioned Superdrug will never actually realise the full decrease during the revaluation period.
Jerry Schurder said: “That the most-struggling retailers in the hardest-hit locations will never see the full benefit of their reduced liabilities makes a mockery of the Government’s approach to revaluations. What is the point of revaluing properties if retailers are unable to see the upside? It is yet another example of a confused thinking on the part of the Government and indicative of an attitude that asks retailers to “pay up and shut up”.
The reason why decreases are phased in is to compensate Government for the protection it grants to those facing increases in bills; under the Government’s preferred arrangements, any rises facing large retailers are ‘limited’ to 45% (compared to a maximum of 12.5% under current scheme).
Jerry Schurder added: “The last revaluation – based on values in April 2008, pre-recession and in a very different economic climate – came into effect in 2010 which, combined with the postponement of the 2015 revaluation, means that the most-struggling retailers will have been waiting seven years to see falls in their bills.
“However, the transitional arrangements mean that rather than receiving the reductions straight away, bills will reduce by only 4.1% next year for larger properties and they will have to wait up five years to feel the full benefit, which for many will be far too late. Retailers in the hard-pressed industrial heartlands have been crying out for reduced rates bills for seven years now since the last revaluation, and at the point at which they finally see light at the end of the tunnel, the Government whips the carpet from under their feet.
“Nobody is claiming that phasing in the largest increases to help retailers address sudden increases is a bad idea, but it is madness that this protection is paid for by denying full and immediate reductions to those in greatest need of them. The costs of phased increases should be paid for by Government – not by those retailers in desperate need of reduced bills – or even better, the system should be reformed to reduce the overall burden and make revaluations more frequent so that such volatility is minimised.”