“A group of conmen” “exploiting small businesses to sign unfair contracts”.
This is how Kevin Hollinrake MP, the Member for Thirsk and Malton described rogue rating surveyors in a Parliamentary debate today focusing on reports of a significant escalation in the number of cases of “cowboy” rating surveyors targeting struggling businesses looking to reduce bills during the pandemic.
Mr Hollinrake named and shamed rogue agents who he claimed are “effectively conning” small businesses into signing long term contracts, which are not in their interests, for reliefs they would have received anyway and then pursuing them through the courts for payments.
The Westminster debate on the “Regulation of business rates reduction services” called for industry regulation to protect vulnerable businesses who are suffering financial distress, in part because of high business rates, from falling victim to such rogue rating surveyors. Mr Hollinrake has called for the Insolvency Service to step in, but so far this body has not agreed that it is their role to regulate. According to the rating team at Colliers, it should be the RICS, The Royal Institute of Chartered Surveyors, that urgently needs to step in and regulate the rating industry.
According to Colliers, and borne out by the debate today, an increasing number of businesses, including Colliers clients, are being approached by rogue rating surveyors promising to obtain a marked reduction in their business rates bills.
Some businesses, unaware they are entitled to reliefs are being targeted by the rogue agents to secure Small Business Reliefs or “COVID” reliefs despite the fact the businesses are in sectors that would have received them for free – by purely writing to the local authorities. The small business involved is then charged an annual fee of up to 52% of the “saving” for the length of the contract. In some cases, businesses have been tied in for 10 or 12 years.
And it is not only the smaller businesses that have suffered from unscrupulous rating surveyors. According to Colliers numbers of such incidents has particularly grown during the lockdowns, when many office based businesses, who did not receive the business rates holidays seen in other sectors, struggled to pay their rates bills and therefore become more vulnerable to such a cowboy element.
A particular spike was seen at the beginning of the year when businesses were led to believe that the government’s Valuation Office (the VOA) had agreed to a 25% reduction on business rates for those mounting an MCC, or material change of circumstance, appeal and rogue surveyors made promises they could help obtain this relief. There is no such relief on offer.
“Businesses are getting desperate" says John Webber, Head of Business Rates at Colliers. “Some who are entitled to reliefs were not aware of them and have therefore been targeted by rogue rating surveyors. Others who are not receiving any support, but with no announcement by the Government of any forthcoming, have been clutching at straws. Rogue agents are able to take advantage of this distress. The current business rates system with its high multiplier and complex system of reliefs has created an unsustainable system, as has the widely criticised and calamitous system of Check Challenge Appeal introduced by the Government in 2017. Both have played into the hands of cowboys extracting money up front.”
“We believe the situation will only get worse after the end of June, when the 100% rates holiday comes to an end for businesses in the retail, hospitality and leisure industries and Government support lessens. Businesses must beware of false promises.”
Webber continued, “We have long been campaigning for the rating industry to be properly regulated and we are supportive of Kevin Hollinrake MP raising this issue in Parliament. We believe there should be a register of appeals professionals, which should be regulated by the RICS, in the same way the FCA regulates financial advisors.”
He continued, “The lack of such a register gives a cowboy element the opportunity to gain credibility and persuade vulnerable businesses that it can save them serious funds. In the current crisis this situation is getting more out of hand. We call the RICS to take robust measures to effectively show these cowboys for what they are. Instead of infighting and navel-gazing, the RICS should take some leadership on a problem which has existed for many years.”