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North/south divide exacerbated by lack of movement from Chancellor in reconsidering putting off the rating revaluation until 2017

wantspacegotspace.co.uk - Manchester: North/south divide exacerbated by lack of movement from Chancellor in reconsidering putting off the rating revaluation until 2017Gareth Wilson, Valuation Associate Director at DTZ comments:

”Today’s budget has done little to improve the prospects of the regional retailing sector. The Chancellor appears happy to sacrifice the declining High Street by not reinstating empty property rates relief or to limit the planned 2.6% increase in rates bills which will add £175m to retailers’ rates costs in 2013. We are advised that the Government’s proposals to put off a revision of the rating list until 2017 are to provide certainty to companies, and to: “ease the bumps in business rates for a smoother recovery” (Brandon Lewis MP, Minister for Local Government quoted in the Telegraph, 23 October 2012).

“Property outside the south east has seen falls in rental values following the onset of the credit crunch in 2007. South east and central London in particular have seen rental increases – Bond Street is the prime example where rents have risen from around £500 Zone A in April 2008 to £750 average Zone A today, with some units up to £1,000 Zone A. In the north, we can compare this with central Bolton or Rochdale, where rents have dropped by as much as 50% over the same period, and in more tertiary locations by more than this.

“The current 2010 rating list is based on a valuation date of April 2008, and in turn is based on evidence typically generated in 2007, at the height of the property market. The Government’s argument turns on the fact that whilst Rateable Values may fall if a revaluation were undertaken in 2015, the rate per pound used as a multiplier would increase to offset this fall. However, if this see-saw effect was to be revenue neutral across the country, it would still benefit the areas away from London and the south east to undertaken the rates revaluation in 2015, rather than 2017. It is these areas which need the most help as the economy flatlines

“Rateable values as they stand are distorting the market, proving a disincentive to invest for companies in the north, whereas it is incentivising investment by companies in London and the south east, where rates are a smaller proportion of the overall cost of occupation. The Government’s plans to push the review of the rating list into the long grass will therefore have the unintended consequence of increasing the north/south divide.”

Posted by The Editor (wantspacegotspace) on 23rd March 2013 (updated 25/03/2013)

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