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What tenants need to know about the draft 2023 Business Rates Revaluation list

Blog tenants needs to know about business rates revaluation hero v2

On Thursday 17 November, the day of the Autumn Budget 2022, we saw many changes in the rating world.


Firstly, the chancellor outlined the key changes that are due to be made to business rates when the new list commences on 1 April 2023. Immediately afterwards the 2023 draft list was published, catching the whole nation by surprise, as it hadn’t been expected to be published until this week. 

In a matter of hours, we were soon provided with answers to the questions which had until then been unanswered for months

What we now know about the Business Rates Revaluation:
  • Uniform Business Rates confirmed at 49.9p for small properties and 51.2p for large (i.e. fixed at this year’s levels).
  • There will be no downward transition.
  • Upward transition will remain, with increases as follows in year 1: 
    o 5% for small properties; 
    o 15% for medium properties
    o 30% for large properties.
  • Retail, hospitality and leisure relief is being extended from 50% to 75% but still with a cap per business of £110,000.
  • A new Supporting Small Business Scheme is being introduced, providing £500 million in support over the next three years. The thresholds have not yet been announced.
  • The 12 months relief for qualifying improvements which was announced in the previous budget, will now be deferred until April 2024.
Draft 2023 Revaluation List Findings

As mentioned above, the 2023 draft list has now been published for properties in England and Wales; (the values in Scotland having not yet been announced). Every property in the country has been issued with a brand-new rateable value (RV) for the next list, which the occupier’s rates liability will be based upon. The Valuation Office (VO) can choose to increase the value, decrease the value or keep it the same.

On a general level, the following statistics published by the Valuation Office Agency, (VOA) summarise the changes that are set to be made to the rateable values from April 1st 2023:

  • The total rateable value for England and Wales on the local lists increased by 7.1% 
  • Total rateable value for England was increased by 7.3% 
  • Total rateable value for Wales increased by 1.3%
  • East region showed a 14.4% increase in rateable value, the largest increase in any of the regions in England 
  • North East region showed a 2.2% increase in rateable value, the smallest increase in any region in England 
  • Retail sector showed a 10% decrease in rateable value, the only sector to show a decrease 
  • Industrial sector showed a 27.1% increase in rateable value, the largest increase out of all of the sectors

It has only been a matter of days since the draft list was published but my main takeaways from it are:

Retail

As mentioned above, the retail sector in general has seen a 10% decrease in rateable value on the next list which is good news for this sector.

On top of that, the removal of downwards transition is also a huge win for the retail market. Now that this has been abolished, it will allow tenants to pay the true rates payable for their store from year one (based on the figures in the rating list). 

For many locations in England and Wales it has been confirmed that the values are going to fall on this next list, as the retail market continues to decline. This fall will be demonstrated not just on high street locations but retail parks and other out of town locations (including primary, secondary and tertiary) and shopping centres. 

Below I have summarised the changes to the values at prime retail locations in cities across England and Wales.

Location

Percentage Change of values between 2017 and 2023 list

Oxford St, London

Between 25%- 30% decrease

Bull Ring Birmingham

Up to 40% decrease

Manchester Arndale

34% decrease

Broadmead, Bristol

Up to 44% decrease

Northumberland Street, Newcastle

UP to 36% decrease

St David’s Cardiff, Wales

20% decrease

 

Elsewhere in other towns/cities in the North, there have been much larger falls in values. Barnsley Town Centre is a good example of this; Market Street has seen a 47% decrease in values on this new rating list.

Elsewhere in the country, on Oxford Street in London, values have fallen by approximately 30%. This is certainly a large fall for a very popular and iconic location, reflecting the general stance taken by the VO on this use class.

Despite the values in many towns/cities falling, that doesn’t mean your rates liability is 100% accurate, and we still advise that you review your rateable value to make sure that the RV is reasonable. It could be that your store should actually be reduced further (and wasn’t reduced enough by the VO).

Industrial

This sector has certainly been hit the hardest in this new revaluation. 

Earlier in the year Colliers predicted a rise across the full sector averaging between 20% and the most prime stock rising to 50%. At first glance it looks as though our predictions have come true.

We have seen that in general, values of industrial properties have increased. That is not the case for every location and it will depend on the quality/specification of the unit. 

For a large number of areas across the country, industrial take-up figures rose at the time of the new antecedent valuation date in April 2021, with values continuing to rise. As anticipated the VO has acknowledged this growth in the market and so have opted to increase the values for a vast number of industrial properties of varying qualities. 

Below I have outlined some of the changes to the values adopted on prime industrial locations across England and Wales on the 2023 list.

Location

Percentage Change of Values between 2017 and 2023 rating list

Park Royal, London

30% increase

The Fort Industrial, Birmingham

27% increase

Trafford Park, Manchester

Up to 30% increase

Vertex Business Park, Bristol

Up to 48% increase

Washington, Newcastle

33% increase

Wrexham Industrial Estate, Wales

33% increase

 

However it could be that for some locations the VO has increased the values by too much, this we will know for sure once we have carried out analysis of the rents agreed in each specific location. 

Offices

In general we have seen values rise in this sector but not to the same extent as the industrial sector. It appears that the values adopted on city centre offices have in the main increased across the country, with the levels of increase varying depending on the location (the prime offices being hit the hardest). Some more secondary, grade B offices will have remained the same. 

Below I have demonstrated how the values of offices in each of the prime locations will be impacted on the next rating list.

Location

Percentage Change in value - between 2017 and 2023 list

Fenchurch St, London

21% increase

Colmore Row, Birmingham

Up to 14% increase

St Peter’s Sq Manchester M2 3AA

5% increase

One, Glass Wharf, Bristol

5% increase

Central Square, Newcastle

8% increase

Fusion Point 2, Cardiff

11% increase

 

As you can see, the values adopted on the prime offices in the city centre have increased above 20%. 

Similar to the industrial sector we anticipated an increase in the rateable values but it could also be the case that for some locations, the VO has over assessed the properties and applied a level of increase not warranted. It is certainly worth assessing whether your RV is a fair reflection of the rental levels at the time of the VOA’s assessment.

What next?

The new list has seen a significant change for businesses through the various property sectors across England and Wales. Particularly for the industrial and office sectors, the list is showing significant uplifts in rateable value, causing an increase to rates liability for many of these occupiers, while for the retail sector there’s some welcome reprieve.

It is clear however that across all sectors there are inconsistencies in the list and our advice remains that businesses review the changes to the RVs applied to their properties and if dissatisfied, start the appeal process as soon as possible before the list goes live in April. 

View our Business Rates services

About the author:

Alastair Dyson is a senior surveyor in our Rating team. He works with companies to assess and manage their rating liabilities, ensuring they pay the right amount for the commercial property.

To contact Alastair, email Alastair.dyson@colliers.com


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Alastair Dyson

Senior Surveyor

Rating

Leeds

Alastair started working for the Colliers' Leeds office as a Graduate Rating Surveyor in November 2017. He gained an MSc in Real Estate from Sheffield Hallam University having previously achieved a BA Hons in Sociology from the University of York.

As part of the Colliers' rating team, Alastair now offers practical rating advice to a wide range of clients.

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