Central London retailers to see up to 435% increase in business rates

By

Barbara Santamaria

Published
Sep 12, 2016

Retailers across London could see their business rate bills increase by anything between 25% and 435% when the revaluation of business rate taxes comes into effect in 2017.

At revaluation, the government adjusts the value of business rates for non-domestic properties to reflect changes in the property market. If there is no transitional relief applied, Mayfair could experiment the highest proportional rate surges, according to new research from Savills.

Retailers on Dover Street could see their business rates surge by 435% or 50% with relief, while companies on Conduit Street could see a 195% rise without business rates relief and 33% with. Also Mount Street could see significant increases with a 180% surge without discounts and 32% with, according to Savills.

David Parker, head of rating at Savills, comments: “Although any rise in business rates is very likely to be phased in incrementally, the mechanics and timing of the phasing are yet to be formally announced, and hence we don’t know what the cap on any increase will actually be.  This leaves many retailers in limbo as to how much exactly they can expect to pay.  The topline, however, is that in most locations in Central London rates bills are set to soar, with phasing cushioning the initial impact, but not for long.“

London‘s West End, including Oxford Street, New Bond Street and roads around Covent Garden, are also set to see a substantial rise in rates, reflecting the fact that rental values in these locations increased by up to 20% year-on-year between 2008 and 2015.  However, future rental forecasts put likely annual rises at approximately 5% in prime locations, with rates increases therefore outstripping gains in value.

Rental value growth on the Kings Road and Kensington High Street, meanwhile, has been among the lowest in Central London, which will be reflected in much lower rate rises compared to other locations.   

Retailers will know what happens to their business rates on September 2016, when the Valuation Office Agency published the draft 2017 rating list.