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On April 1st 2017, across the UK all B1 use properties are being revalued and the new rates that will be payable are likely to fill the occupiers with dread. Once revalued, the rates are expected to jump to just under two thirds of rents – so on top of high rents they can expect to pay an extra 60% on rates and for many this might not be possible. In London’s City market, this could amount to an additional £20 per square foot and £23 per square foot in the West End.
Usually the rates are revalued every 5 years but the last revaluation was in 2010. The revaluation was postponed by two years as the government didn’t want to spend the £43 million it would cost to complete. The rates payable reflect the value of the property and in 2010 property values and rents were down as the UK was trying to recover from the recession. We are currently seeing record high rents which is unfortunate for occupiers but now rates will be valued at this high level, it’s a double whammy; yet convenient for the government.
In the 1990’s, there was an extended revaluation period and the system we use today was introduced. With the county suddenly having to pay much more tax occupiers could no longer afford to pay the rents pre revaluation and rents in the London City market dropped by 65%! Ollie Salter, a surveyor at Morgan Pryce states, “I am sure occupiers wouldn’t mind a drop in rent and there will be transitional relief to cap the rise in rates at 20% a year; but a property crash would have a negative impact on our economy and foreign investors might suddenly lose faith and pull out of the ‘safe haven’ London property market.”
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.