Call for Chancellor to continue temporary rates relief for businesses

Incentives that were introduced to help small businesses and retailers should be extended to encourage a stronger period of growth, a leading ratings expert has claimed today.

As businesses await the forthcoming autumn statement on December 3rd, 2014, David Cureton, head of rating at Birmingham chartered surveyors Johnson Fellows, said extending temporary measures that they have taken advantage of would help to provide extra stability for the next couple of years.

“We’ve seen the green shoots of growth over the last couple of years and I’d very much hope that the Chancellor of the Exchequer will recognise the benefit of the measures and extend them further,” he said.

“A general election is usually a time that creates a level of uncertainty in business and with the UK due to go to the polls in May, the autumn statement would be the ideal time for George Osborne to offer further help for retailers that have been affected by the rise of internet shopping.

“The same can also be said for other businesses across the commercial property sector – everyone would like to see the green shoots they have experienced over the past 12 months develop stronger roots for stability.”

The measures were introduced as a concession for businesses when the government announced it would delay the five-yearly rating revaluation from 2015 until 2017 to protect them from volatility in the market.

The last revaluation in April 2010 was based on pre-recession rental values in April 2008. If the April 2015 revaluation were to have gone ahead, it would have been based on rental values as at 1 April, 2013 – when there were lower rental values, which was a direct result of the recession.

The delay means businesses – particularly retailers – will miss out on significant reductions in rates liability over the next two years.  Small business retail rate relief – applicable to occupiers whose property rateable value is less than £12,000 – is due to end on 31 March, 2015.

Under the scheme, qualifying occupiers whose properties have a rateable value up to £6,000 receive 100% relief, while those whose properties have rateable values between £6,001 and £12,000 receive relief on a sliding scale.

“Rates are probably the third biggest direct cost after salary and rent so I would like to see George Osborne extending the rate relief for at least another 12 months,” said David. “Businesses would be very disappointed to see it go, even though they were introduced as a temporary measure.

“Such a measure can make a huge difference to small businesses that are finding their way in a new market, and building their portfolio or customer base.

It would bolster the introduction of a business rates discount of up to £1,000 to all occupied retail properties with a rateable value of £50,000 or less in each up to 2016, which was announced in the 2013 autumn statement.

Further assistance for business would be welcomed – especially in light of recent estimates by the Office of Budget Responsibility (OBR), which says that in ten years from 2008, business rates are projected to increase by 41%, compared to council tax, which OBR estimates will rise 26.6% in the ten-year period.

David also called on the Chancellor to extend the empty property rate relief for newly built commercial buildings to bolster the construction sector and encourage them to begin more speculative development projects.

The relief applies to properties completed between 1 October 2013 and 30 September 2016 that are not occupied during the first 18 months after construction.

“This would help businesses to make bolder decisions about speculative development across the commercial property sector, including warehouses, offices and factories because it reduces the business rates liability of owners of empty buildings,” said David.

“We need to see a drive in confidence and a renewal of speculative development because there have only been a few pockets of this so far. We see property developers dipping their toes into the construction of new buildings on a speculative basis, where we need them to be bold.”

The final measure that would benefit business would be a partial freeze in small business national non-domestic rates (NNDR).

“A below-inflation increase would provide a significant boost to businesses across all sectors. We’ve seen the number of bankruptcies and insolvencies drop – we need this to continue if we are to make sure we are in a position to grow economically.”

However, it will not be until we know the outcome of the general election next year that businesses will have a clearer idea of what is in store for the following five years.

Johnson Fellows, which celebrates its 30th anniversary this year, has established itself as one of the region’s leading independent chartered surveying practices, specialising in property management, professional services, building consultancy and more recently valuation, rating and industrial agency.

Earlier this year, it took over Salway Bradbury, based in Solihull, consolidating further its reputation on both the regional and national stage.  Johnson Fellows is a commercial property consultancy established in 1984. The practice encompasses several specialist departments and acts for a variety of clients including retailers, investors, developers, financiers and occupiers of commercial property. It specialises in providing professional advice, current market information, guidance through the constantly changing laws and statutes which govern the use of property and, above all, in providing a service which seeks to achieve the optimum commercial outcome for clients.  Its team of dedicated surveyors advises many of the UK’s national multiple retailers on a nationwide basis.