There may be no winners in the government’s business rates revamp, but Jeez, there seem to be plenty of sore losers.
This week, London businesses took to the pages of the Evening Standard to bleat about rates rises in the South East. “Unfair,” cried one. “Outrageous,” declared another.
How do I put this? My heart bleeds - especially for the hard-done-by manager of a Mayfair nightclub that used to be a hangout of the royals!
People are whingeing that London is being treated as the cash cow of the UK, but, sorry, it should be treated that way. It is the cash cow of the UK.
The reason rates will go up in the South East is because rents have soared. By the same token, rates in poorer areas of the UK will plummet, because rents have fallen - and hopefully these lower rates bills will help struggling high streets to thrive again. The national rates bill overall isn’t going to rise, so what’s the problem?
The problem is that Londoners are completely forgetting how lightly they’ve got off in the past few years.
When Brandon Lewis announced in 2012 that the 2015 rates revaluation would be delayed by two years, my predecessor Giles Barrie lambasted the “hapless junior minister” for inflicting two more years of pain on occupiers, who, he pointed out, would continue to have their rates based on boom-time 2008 rents rather than the 2013 levels a 2015 revaluation would have been based upon.
As he argued: “How can it be fair for retailers in the North East and North West to subsidise retailers in Regent Street?”
Bolton paying for Bond St?
How indeed? Occupiers in the regions basically were lumped with high rates despite a collapse in rents during the financial crisis, while those in central London had their rates suppressed when there had been rental growth.
Now the new draft rateable values have been released, it is clear that once again the regions are set to suffer, as large businesses expecting a sharp reduction in their rates bill see that capped at 4.1% in the first year under the transitional relief system.
London has been hit hard, yes, but businesses outside London have hardly benefited. One participant in this week’s Twitter #ratesdebate, hosted by Property Week and BNP Paribas Real Estate, summed it up neatly when he tweeted the following:
— Paul Mitchell (@PaulTMRetail) October 10, 2016
Or in UK plc full stop, for that matter.
Battersea powers on
Talking of power, or more specifically power stations, in April, Property Week ran a feature asking whether Rob Tincknell’s Battersea scheme was experiencing “power failure”.
This week, we reveal it is thinking about powering up the commercial components of the scheme in the wake of last month’s landmark letting to Apple and, paradoxically, to mitigate the impact of the weakening prime residential market. It makes sense to go more mixed use in the current market.
And, of course, introducing more offices and retail is likely to go down well with the local authority… because it generates business rates. There is a winner, after all.