In what has been billed as the biggest change in a generation, the process of the 2017 business rates revaluation is well under way. Matthew Midwinter, partner at national property consultant Sanderson Weatherall, considers how Bristol’s retail, office and industrial sectors may be affected.
What are business rates? 
Business rates are a tax payable on non-domestic buildings, set by the government and collected by the relevant local council. Similar to Council Tax for domestic properties, business rates serve as a contribution towards local services. Depending on whether you occupy a property, or you’re the owner or the leaseholder, business rates must be paid. In England and Wales, business rates are calculated according to a property’s ‘rateable value’. This figure is then multiplied by the annual Business Rates Multiplier, which is set by the government, to give the total amount payable before any deductions.
What changes are under way?
On April 1 next year new rateable values for properties around the country will be implemented. Prior to this there is a lengthy process, including a number of key dates throughout 2016 and 2017 that the majority of sectors in the city must be aware of.
Draft rateable values were published online by the VOA (Valuation Office Agency) on September 30, which help organisations to understand their new valuation, while providing an opportunity for them to tell the VOA about any errors before the new rates are applied from April. For the first time, this information has only been made available online via the VOA website, and they won’t be sending out printed valuations.
How will it impact the retail, office and industrial sectors?
Most business, whether occupying retail, office or industrial space, are likely to experience a change in their business rates as a result of the business rates revaluation. This is because the valuation date is set two years before the last revaluation and since there has not been a revaluation since April 1, 2010, local authorities in England and Wales are still basing their business rates bills on 2008 figures. This will change next year, as all non-domestic properties in England and Wales will be reassessed based on a valuation date of April 1, 2015.
Sanderson Weatherall has a network of offices across the UK, in addition to Bristol, and works closely with different sectors across the South West which enables us to experience some interesting variations.
For example in Bristol’s Queen Square, rents have increased and therefore businesses, including Sanderson Weatherall, can expect rates to rise. As a rule, office rents are increasing across the city centre, but many retail rates are likely to be unchanged or even reduced.
We have also seen recent increases in office rents across the South West in cities such as Bath. But again, headline rents on retail in and out of town have fallen in recent years. In Exeter, rents have increased across all markets in recent years, albeit some secondary stock will buck the trend, so business should expect their rates to increase accordingly.
However, there remain areas of Bristol and the South West where rental values for many types of property have not recovered to their pre-recession levels – particularly in the retail sector but also offices and industrial properties – and, as a result, those owners will most likely enjoy newer, much lower rateable values.
Whichever sector business operates in, they should seek the help of a qualified rating surveyor who can ensure they are on the correct rateable value and advise on any small business rate relief they might be entitled to.
What happens next?
Although the draft rateable values have now been published, businesses will not be able to calculate their new business rates until the government announces the multiplier in January. New rates bills will be issued on March 1 next year and the revaluation comes into effect from April 1.
The important thing is that businesses seek advice from a qualified rating advisor as soon as possible to make sure they are not paying over the odds. The advisor can assess the business’s draft rateable values and analyse whether they are entitled to a reduction in their business rates.
To find out more about the 2017 business rates revaluation and Sanderson Weatherall’s services, visit www.sw.co.uk/businessrates
