Big retailers are business rates winners after latest budget
The UK government’s new approach to business rates will create winners and losers and many major name retailers will be among the big winners.
The publication of the Draft List for the 2023 Revaluation, sees the government going quite some way to addressing issues that have been a huge problem for retail in recent years.
John Webber of property specialist Colliers said that while operators of large warehouses and logistics/distribution space will see the biggest jump in their rates bills when the new Revaluation comes into force next April, retailers will get a boost.
Colliers said that the retail sector on average has seen a 10% decrease in Rateable Value (RV) in the next list — the only sector to show a decrease. Together with the decision to freeze the multiplier at 51.2p for large businesses and 49.9p for smaller businesses, “this is good news for retailers who will be seeing a reduction in their rates bills in April”.
This news has been enhanced by the removal of ‘downwards transition’ announced in the Autumn Statement, as it means retail occupiers will pay the true lower rates for their stores as soon as the new list starts rather than the reduction being phased in gradually.
According to John Webber, “we are expecting to see substantial business rates bills reductions across England and Wales, not just on high street locations but in retail parks and shopping centres and other out-of-town locations.”
The 10% decrease in RVs is an average — in some locations, RV reductions of 30% or 40% are expected.
The biggest winners are large department stores and hypermarkets. For instance, on Oxford Street in London, RVs have fallen by approximately 30%, but some stores have benefited more. Selfridges has seen its RV drop 45% from £30.5 million to £16.8 million with the new list. And in Knightsbridge, Harrods has seen an RV reduction from £32.7 million to £16.8 million. The rates bills of these stores will correspondingly drop 45% and are expected to be £8.6 million and £9.2 million, respectively.
The percentage change across Oxford Street is 25-30%, while for Birmingham’s Bull Ring it’s up to a 40% drop. In Manchester Arndale it’s a 34% drop, and the difference for Northumberland Newcastle is as much as 36%, while St Davi’s in Cardiff is a 20% dip.
Elsewhere in many towns and cities in the North there have been even larger falls in values. In Market Street in Barnsley Town Centre, values have fallen by 47% on this new rating list.
But increases of up to 48% at logistics hubs will be bad news for online retailers (including many physical stores with thriving online ops).
And some RVs have risen even more. Colliers said the rateable value of Amazon’s warehouse at Tilbury in Essex has risen by 74% to £12.3 million.
However, there will also be upward transitional relief caps to support ratepayers facing large bill increases following the Revaluation.
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