Chancellor Philip Hammond has confirmed in his Spring Budget that the government intends to move towards shorter revaluation periods.
In addition, the next business rates revaluation will be brought forward to 2021 with subsequent revaluations taking place every three years instead of every five.
What does this mean for businesses?
The good:
- A shorter revaluation period ensures that changes in rental value are reflected sooner, which would lessen the severity of increases between rating lists, as seen between the 2010 and 2017 rating lists revaluation.
- A 3 year revaluation cycle is reflective of changes to commercial leases that have also moved away from traditional 5 year rent reviews to shorter review periods.
- Each new rating list brings about a fresh opportunity to appeal, offering a means of recourse for properties that have been overvalued.
- 2021 rateable values will be based on rents agreed on or around 1st April 2019. In a rising market (say within the industrial sector for example), it would be beneficial for businesses to have their future rateable value based upon 2019 levels.
Businesses with lease events taking place on or around 1st April 2019 should take business rates advice now.
The bad:
- ‘Check, Challenge, Appeal’ so far has only served to slow down the appeals process, ultimately forcing the ratepayer to pay at an incorrect rate for a longer length of time. Bringing forward the revaluation doesn’t address the issues businesses face with the current system and rating list.
- As of September 30th 2017, only 1210 valuations had reached the ‘challenge’ stage in England, representing a 99.3% decrease compared to the same period in the 2010 rating list.
- Increasing the frequency of revaluation increases the burden on an already complicated and under-resourced appeals process.
- Without additional support, the process could lead to overlapping checks, challenges and appeals taking place alongside a revaluation.
- Increasing the frequency of revaluation comes at a cost that will have to be met by the ratepayer due to the business rates system being revenue-neutral.
For help or advice in relation to how the changes might affect your business, don’t hesitate to get in touch with our expert business rates team.
