Business rates reform: Property industry calls for annual revaluations
The government should be looking at annual revaluations for business rates, a trade body that represents the real estate sector has said.
The British Property Federation (BPF) which counts landlords, developers, property agents and investors as members, is calling on ministers to set out a roadmap for moving to annual revaluations.
Melanie Leech, chief executive of the organisation, said: “We need annual revaluations and transparency over how valuations are determined, more frequent revaluations is only one piece to the jigsaw.”
In June the government said it was consulting on plans that would see revaluations of non-domestic properties take place every three years instead of the current system of five.
That consultation ends on August 24, and is likely to attract a number of responses. Retailers and landlords have long said the business rates system needs reform.
The tax is linked to the underlying value of a property, but they are currently based on values from April 2015. That does not reflect how real estate values, particularly in the retail sector, have been hit by factors such as the Covid-19 crisis, and competition from online rivals.
Rates do not take into consideration how sales are doing.
The BPF’s response to the consultation said: “We are calling on government to publish a roadmap setting out key milestones for delivering more frequent revaluations. We would expect to see the new 3-year cycle of revaluations start in 2023. We believe that a 1-year AVD (antecedent valuation date) is achievable in time for the next cycle of revaluations in 2026. The roadmap should then set out a timeline for moving to annual revaluations.”
Leech said: “More frequent revaluations is only one of a number of reforms needed to make the business rates system fit for the future.”
“ Government must also reset the business rates multiplier at a fairer level, abolish downward phasing (where a deduction to a business rates bill, following a revaluation, is restricted) and provide additional business rates relief on empty properties.”
The boss added that the current system is “undermining town centre recovery and poses a significant risk to the future of our high street businesses”.
A Treasury spokesman said: “We’re conducting a fundamental review of business rates, and have already set out proposals for more frequent revaluations of properties, ensuring bills more quickly reflect changes in the economy. The review will conclude in the Autumn.”
Melanie Leech, chief executive of the organisation, said: “We need annual revaluations and transparency over how valuations are determined, more frequent revaluations is only one piece to the jigsaw.”
In June the government said it was consulting on plans that would see revaluations of non-domestic properties take place every three years instead of the current system of five.
That consultation ends on August 24, and is likely to attract a number of responses. Retailers and landlords have long said the business rates system needs reform.
The tax is linked to the underlying value of a property, but they are currently based on values from April 2015. That does not reflect how real estate values, particularly in the retail sector, have been hit by factors such as the Covid-19 crisis, and competition from online rivals.
Rates do not take into consideration how sales are doing.
The BPF’s response to the consultation said: “We are calling on government to publish a roadmap setting out key milestones for delivering more frequent revaluations. We would expect to see the new 3-year cycle of revaluations start in 2023. We believe that a 1-year AVD (antecedent valuation date) is achievable in time for the next cycle of revaluations in 2026. The roadmap should then set out a timeline for moving to annual revaluations.”
Leech said: “More frequent revaluations is only one of a number of reforms needed to make the business rates system fit for the future.”
“ Government must also reset the business rates multiplier at a fairer level, abolish downward phasing (where a deduction to a business rates bill, following a revaluation, is restricted) and provide additional business rates relief on empty properties.”
The boss added that the current system is “undermining town centre recovery and poses a significant risk to the future of our high street businesses”.
A Treasury spokesman said: “We’re conducting a fundamental review of business rates, and have already set out proposals for more frequent revaluations of properties, ensuring bills more quickly reflect changes in the economy. The review will conclude in the Autumn.”