If you were in any doubt as to the level of anger among businesses over the delay to the rating revaluation, look no further than the fact that two-thirds of the top 50 business rates payers are appealing their 2015/16 bills - yes, two-thirds.
They have every right to be furious. If their bills had been recalculated this year - based on 2013 valuations - as they should have been, they could well have been significantly lower. Instead, their bills have been based on a list compiled in 2010, which in turn was based on valuations carried out in 2008 - pretty much the top of the market and certainly before the global financial crisis kicked in.
The problem is that if the government had carried out the revaluation in 2013 (implementing it this year), the fall in rateable values would have forced it to increase the tax rate to about 56% from the current 48%, which would also have hacked people off. In short, the postponement seems to be little more than a cynical ploy to swerve the issue ahead of the election - while cunningly maintaining revenue.
So where does this leave businesses? Well, for Heathrow airport, it leaves it facing a whopping £118.3m bill, according to research carried out exclusively for Property Week by business rates campaigner, Paul Turner-Mitchell. The top 50 business rates payers face a truly eye-watering total bill of £672m.
As the BPF cogently argues, by 2017, businesses will be paying rates based on valuations that are nine years old - bad enough for businesses operating in sectors that held up pretty well during the downturn, but a total disaster for underperforming locations and sectors. Just look at what has happened to retail rents in London versus the regions. You could say Rochdale was effectively subsidising Regent Street and Barnsley Bond Street. Not something northerners will be too happy to hear in the week it was revealed that almost 20% of retail units are empty up north.
The reality is that where rates are artificially high between revaluations, it makes it harder to develop and harder for struggling places to recover. It is not just retail that is suffering. Regional offices are also being hit hard. And don’t underestimate the impact on businesses in the capital either - especially global operators.
As one West End retail agent points out: “Landlords are pushing rents in London - and indeed elsewhere - to unobtainable levels. But the big problem for international retailers is rates, which are an absolute killer because in general they’re paying 35%-40% on top of rents. If you’re paying £600-plus zone-A and you add rates onto that as well it’s very, very painful and it’s difficult to make it work.”
Does this improve the UK’s standing in the global community? Is it fair? Does it in any way, shape or form help the economy? No, but as ever, property is an easy target, one that seems to get just that much bigger in election years - which is why we should all back the BPF’s call for the rating revaluation system to be modernised.
It has proposed the introduction of a fixed multiplier that ensures rates are based on how well the economy is doing, as well as more frequent revaluations and greater relief from empty property rates, which it rightly argues are “a deeply unfair tax on business failure that also adds cost to economically desirable (re)development activity”.
It is also calling for any review of the business rates system to address the need to reduce the level of appeals. Its logic is hard to argue with. After all, a system that has prompted two-thirds of business to appeal their rates, and basically thrown the whole process into chaos, surely cannot be in anyone’s interest.