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North West businesses “subsidising” luxury brands in London as they reap £66m bonanza from Business Rate revaluation delay

wantspacegotspace.co.uk - North West businesses “subsidising” luxury brands in London as they reap £66m bonanza from Business Rate revaluation delayThousands of North West businesses are effectively subsidising luxury brands such as Versace, Burberry and Chanel following the Government’s decision to delay the Business Rate revaluation.  

So whilst struggling  firms across the region face paying business rates based on pre-Recession calculations of property values, Bond Street based retailers are set to enjoy a £66m bonanza thanks to the status quo.

The stark North/South comparison was revealed in new figures from the influential national Grimsey Review, as well as Manchester-based Property Consultants Dunlop Heywood’s own regional findings.

Additional research by Grimsey, who published an alternative Review of the high street in September, found that retailers on London’s prime retail location – home to some of the world’s most luxurious brands such as Chanel and Burberry - will save a total of £66m thanks to the 2 year postponement.
The average saving for each retailer will be £575k between 2015 and 2017. Burberry alone is estimated to be saving £2m in tax as a result of the Government’s decision. Other “winners” include stationers Smythson saving an estimated £850k; Chanel nearly £3.5m and lingerie specialist Victoria’s Secret just over £2.5m.

The research found that the 2010 valuations, based upon shop rents in April 2008, would have increased on average by 72% had the revaluations gone ahead as scheduled in 2015 with the most commonly adopted value per sq m of £5,000 having risen during the last five years to £8,611.00.
In sharp contrast Dunlop Heywood has calculated that North West businesses will be left with higher business rates that otherwise would have fallen by an average of 30-40% in some areas.

In Manchester, even prime retail locations on King Street have seen rents drop since April 2008 by 40%. Shops such as Thomas Pink, Jack Wills, Dalvey and Hancocks Jewellers will have to pay business rates based on figures that were calculated pre-recession and woefully out of date.
And despite the rent drops, many units have now become vacant as retailers move out; so much so, that an allowance based on a “Material Change in Circumstance” is thought to be imminent.

Dunlop Heywood Managing Director Stuart Hicks has been monitoring the situation closely. He says: “The figures are truly shocking. The Government claim to want to inject some stability into the market so businesses will know what they are paying in business rates until 2017. That would make sense if it didn’t blatantly throw up huge anomalies like this where some of the most expensive retail space in the world is effectively been subsidised at the expense of poorer regions. On average, 1 in 5 shops currently stand empty across North West town centres.”

“How can you justify the likes of Chanel enjoying a £3.5m saving when smaller businesses are just struggling to keep their heads above water? The revaluation would have “reset” the market values and restored some balance across the country, but as it is we just see an even deeper North/South divide developing.”

Posted by The Editor (wantspacegotspace) on 25th November 2013

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