Colliers International, has published findings showing the Top 10 retail locations
across the UK, which have seen the largest increase in vacancy rates coupled with a significant decrease in rental value. These are the locations in the UK which are most likely to benefit from lodging an appeal against their business rates, backdated to 2010, before the 31 March 2015 deadline. The following are ranked by highest increases in Vacancy Rates between 2010-2014.
4 Merry Hill
John Webber, Head of Rating at Colliers International, says: “This research is compelling – it combines the MSRR rental information from Colliers with the LDC data – this isn’t just a smoking gun – it is two smoking barrels of evidence that the VOA should be happy acting on to reduce the Rateable Values of retail units in those worst affected towns.”
The impact of the recession has been hardest felt outside London with higher vacancy levels and larger falls in rental values, with every region in the country impacted, with the exception of London.
Between 2008 and 2014, retail rents have fallen most in the following regions:
• Nationally by -14% or -22% if you exclude London
• Wales - 38%
• North East - 31%
• West Midlands - 26%
• South West -24%
• Eastern -21%
• East Midlands -19%
• North West -19%
• Yorkshire & Humberside -19%
• South East -17%
• London rents have increased by 28%
• Outer London has seen rents flat, but in real terms have declined if you factor in inflation.
The Chancellor’s Autumn Statement in December 2014 heralded some major changes for all businesses occupying commercial property in the UK, the Government introduced a deadline of 31 March 2015 for appeals on business rates valuations, which was almost lost in the small print. This deadline applies to all businesses liable for business rates, across all commercial property sectors.
John Webber, continues by saying: “The last rating revaluation was carried out in 2008 (for the 2010 listing), at the peak of the rental cycle – which will last through until the next one in 2017, following the deferral of the 2015 revaluation, which was announced in the Chancellor’s Autumn Statement in December 2014. I believe that the postponement of this revaluation – which means that retailers and other businesses continue to pay rates based on pre-recession property values – will decimate those locations hardest hit, and could decimate the high street as a result.”
These findings highlight the pressing need for a more frequent rating revaluation than the current system, which bases business rates on rental growth from up to nine years previously. The time lag between valuations and business rates is too long, particularly as we are already seeing an overheating in certain sectors such as Supermarkets, which will, in 2017 be paying business rates based on rents now and on growth in rents since 2008.
Businesses have 6 weeks left to appeal their business rates, or risk losing out on 5 years’ worth of overpayments.
Colliers International has set up a hotline for businesses to call, to find out more about this issue and to find out whether they are entitled to a rebate: 0800 3583230 or more information can be found on the Colliers International website here