Martin Hughes of Barker Storey Matthews (now part of Eddisons) considers the Government’s announcement of the postponement of next year’s scheduled revaluation which will now take place in 2022.
Last month’s announcement by the Communities Secretary advising of the postponement of next year’s rating revaluation was just one in the wave of government announcements whose effect will have an impact on business occupiers as we move forward in the setting of the Covid-19 pandemic.
The announcement has not passed by without comment from property industry professionals because business rates are one of the fixed costs occupiers and operators face. Arguably, it’s been the one most subject to scrutiny and criticism in recent years as being antiquated and not flexible enough – particularly in markets which have suffered structural change during a rating period.
The May announcement, against the backdrop of easing the business lockdown, supercedes that of last spring (2019) when it was intended that the planned 2022 revaluation exercise was brought forward by twelve months to 2021.
The rationale for the postponement is that the antecedent valuation date is always two years prior to the new assessments becoming effective. That is, the 2021 revaluation figures would have been based on the market of spring 2019 and, therefore, not reflect the impact of Covid-19 on the property market.
The one year delay in the revaluation date will see it based on rents as at April this year (2020) – before the effects of lockdown had played out in the market (in whatever form that will take).
The proposed delay to 2022 of the exercise will not, therefore, be as helpful as intended. As in the last downturn – immediately following the 2008 financial crash – by the 01 April 2020 date there will have been little or no actual evidence of the impact of Covid-19 on rents.
The VOA (Valuations Office Agency resolutely defended ratings appeal against the 2010 revaluations list where rents were anchored round values as at 01 April 2008.
The basis of the defence being that there was no evidence to prove an adverse impact which would come about later in 2008, post-September, when the crash was spearheaded by the collapse of Lehman Brothers (15 September 2008).
The VOA could well argue the same case again about 01 April 2019 rental values and not take a charitable view when challenges to the post-2022 rates regime may be aired.
Given that we are in such, to coin the phrase du jour, such ‘unprecedented times’, we can’t rule out another postponement to beyond 2022. It if were later, there will be some fair and useful evidence available if the antecedent date to the revaluation exercise were to be 01 April 2021, for example.
Of course, the property industry would like to see a complete overhaul to the current regime rather than a simple delay to the revaluation.
That being said, alongside other announcements intended to mitigate the effect on businesses of trading in Covid-19 times, there are some relief and grant schemes already in place for the retail, hospitality and children’s day nurseries, among other occupiers.
In addition, many local authorities are being proactive in this respect. However, business rate payers are advised to approach their billing authority sooner rather than later to ensure they are receiving and claiming every benefit or grant for which they qualify and are entitled.
For more information about valuation services see bsm.uk.com/our-services/rating-compulsory-purchase-&-compensation.