Occupiers of Industrial and Logistics to Expect Significant Hike in Business Rates
Lambert Smith Hampton (LSH) a leading UK real estate consultancy in commercial and residential property, warns occupiers of industrial and logistics to expect a hike in business rates within the next revaluation.
The date has been set for non-domestic properties which will be given a new rating list that will come into effect on 1st April 2021.
In general terms, the Antecedent Valuation Date (AVD) will calculate a hypothetical rental value for every commercial property in the UK; this figure is then used to estimate rates of payable through ‘rate poundage’.
Originally scheduled to occur on 1st April 2022, the government has decided to bring it forward by a year as it has been four years since the last revaluation and six years for the AVD.
LSH published an analysis for rental markets of England and Wales between 2015 and 2019 which suggests that industrial and logistics sector will likely be hit with higher rateable values, they expect the rise to be as steep as 25% on average.
Industrial and logistics – top three growth locations:
Neath Port Talbot (50%)
Milton Keynes (44%)
Industrial and logistics – bottom three growth locations:
West Devon (14%)
Providing some welcome relief to the high street, the retail sector is expected to fall by an average of 3%.
Retail – top three growth locations:
Runnymede, i.e. Staines/Chertsey (5%)
Retail – bottom three growth locations:
Vale of Glamorgan (-17%)
Blackburn with Darwen (-8%)
The office sector, which has seen steady growth over the past four years, is predicted to increase by 16%.
Offices – top three growth locations:
Offices – bottom three growth locations:
Redcar & Cleveland (-7%)
The research done by the team at LSH suggests that East of England will be rising the most – around 12.4%. However, Wales might see a slight fall by 1.8% on average.
Paul Nash, Director of Business Rates at LSH, commented: “Inevitably this will create some winners and losers. On the plus side, it helps smooth out massive swings in liabilities for occupiers and enables the VOA to iron out anomalies on a more frequent basis. Flipped over, it remains to be seen whether a transitional scheme will be introduced in 2021, which is designed to limit substantial increases and decreases in liability at rating revaluations.
“Despite our forecasted moves, it is too early to accurately quantify how individual ratepayers will be affected. That said, businesses currently occupying properties in locations where rental values have increased significantly since 2015 should prepare now for rate liability rises. In particular, those in the process of currently negotiating new leases, lease renewals or re-gears should take any projected increases into account before making a decision.”