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Paul Davinson at Jones Lang LaSalle says Yorkshire businesses will be adversely hit by proposals
Leeds, 22 October 2012 – The Government’s unexpected announcement on Thursday 18th October 2012 of its intention to delay the next Business Rates Revaluation has prompted much surprise from the commercial property industry and is likely to have a significant impact on businesses in Yorkshire from 2015 onwards according to property consultants Jones Lang LaSalle.
Since the last Rating Revaluation in 2010 (based on 2008 property valuations), values in certain property sectors have been subject to significant downward price adjustments. The Government’s announcement, included within The Growth and Infrastructure Bill, proposes an annual business rates charge continuing until 2017, using 2008 values, rather than the intended 2015 Revaluation which would use 2013 values.
Paul Davinson, director of Rating in Jones Lang LaSalle’s Leeds office, says: “The Government claims that this revaluation postponement will prevent unexpected hikes in business rate bills by providing certainty of business rates linked to inflation until 2017 and a greater ability to provide certainty for business to plan and invest. This does appear to conflict with a Revaluations purpose of redistributing business rate levels to reflect more up-to-date rental market changes. Whilst the total revenue generated following a Revaluation may not significantly change, the realignment to updated values ensures that business rates more closely correlate with property value changes.
“Every five yearly commercial revaluation over the last 20 years has ensured that in areas of declining property values, annual business rate costs for many firms have reduced. Given the movement in property values from 2008 onwards, deferring the revaluation to 2017 effectively prohibits any opportunity for business rates to readjust to market values for an additional two years.“In Yorkshire, many regional businesses looked likely to be the major beneficiaries of the next planned rating revaluation in 2015 as their rents will have fallen further in relative terms than the average falls experienced across the wider economy however many properties will remain at levels unrepresentative of market value changes if these proposals go ahead.
“Regionally, the effect of this potential postponement will be significant. Office and retail values in many areas have decreased significantly in recent years with many firms expecting business rate levels to reflect this from 2015. For many businesses the result will be two more years of hardship for the very companies that should have benefitted from the revaluation process.”Paul concluded: “Whilst these proposals are still subject to Parliamentary approval, it is expected that the greater proportion of the regional commercial property industry will see this proposal as a backward step in terms of reflecting the substantial market changes that have occurred and the outlook in the immediate short to medium term for the commercial property sector.”
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