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There has been much discussion over the last 6 months as to whether the UK business rates system is out of date. In the Morgan Pryce office we quickly came to the conclusion the UK rating system was out of date and was having a strong negative impact on businesses, especially in London. Ollie Salter a surveyor at Morgan Pryce thinks, “Any system that was created in the 16th century which has remained relatively unchanged for 600 years clearly needs to be updated. Times have changed dramatically since then and the rates system has needed to change with to be in keeping with modern business.”
Business rates have been looked at and revalued by the government in April and they recognised there needed to be change, however it was declared any changes must be fiscally neutral i.e. where taxes and government spending are neutral, with neither having an effect on demand, which many believe is an excuse for no immediate change.
The current system means building values are calculated every 5 years, the latest revaluation was in 2008 meaning in 2013 there should have been a revaluation. However the government manipulated the system and delayed the rating by 2 years when property values were peaking at pre-recession levels. A system of annual revaluations has been advised in the past ensuring businesses are paying rates on up to date rental values or just to use a fixed annual multiplier that takes into account rental growth and general economic condition. According to the Chief Exec of the British Property Federation, using the current system commercial property rents have increased 9% since 1990 compared to a 107% increase in RPI. Clearly there two figures so not match up and something needs to be done to help relieve businesses in the UK.
This news was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.