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News Release

London

It’s refreshing to see a lower decapitalisation rate for Northern Ireland says Colin Parsons, director in Rating, London


"Recently The Department of Finance and Personnel (DFP) announced the new statutory standard decapitalisation rate for Northern Ireland applicable from April 2015.

"Set at 4% (down from 5.5% currently), JLL was one of only three respondents in the consultation that suggested Northern Ireland should set its decapitalisation rate appropriate to market conditions and supported its submission with prevalent costs of finance which suggested the rate should not exceed 4%. If the Governments original proposal to align the decapitalisation rate with the current rate of 5% applicable in England and Scotland had been favoured, the decision would have disadvantaged a specialist class of properties for what might have spanned many years.

"Moreover the reduction from the originally proposed 5% to a decision at 4% is equivalent to a 20% reduction in rateable value in respect of c.16%.of the total value of all non-domestic properties in Northern Ireland. Without this adjustment (underlying construction costs have broadly increased by 38% BCIS index) these specialised properties would have faced increased assessments well in excess of other sector categories.

"The significant impact of the decision to set the rate as low as 4% in Northern Ireland could subsequently influence what is decided for the rest of the UK at the next revaluation due in April 2017 where a much larger number and more valuable group of specialist properties are located.

"For now I am happy that the Government has listened – it's always refreshing to note when the Government changes course and responds to submissions."