The Retailer Winter 2018/19

Preparing for the 2021 Rating List as Brexit Looms

JOHN WEBBER HEAD OF BUSINESS RATES Colliers International

This may of course mean that advisors are remunerated in a different way, but the savings and benefits to retailers could be enormous. The delay in dealing with town committees was largely to do with CCA and the new Group Pre-Challenge Review (GPCR) process – a version of pre-filing agreements. Now this is in place and 2019 is the year when many retail town centres will be discussed, the timing should be put to the advantage of the retail sector. And that does of course mean a lot of work is done for the VOA at the same time. Set against this opportunity however, there are still a number of clear and present dangers for retail. One main worry is that rates bills are about to drop in the coming weeks. For those with large properties in England (£100,000 Rateable Value) affected by ‘downward phasing’, the new bills will show a small reduction of 5.9% less inflation while those with large properties affected by ‘upwards phasing’ will see eye watering ‘caps’ of 49% plus inflation. In other words, some areas of central London retail will have rates bills land in the coming weeks which are 50% bigger – in one year alone!! This is on top of 42% increases in 2017/18 and 32% in 2018/19 plus inflation, (see Box 1) a combined increase in 2 years of a staggering 124% plus inflation. These increases are clearly starting to have an impact on the occupational market and in turn on rental levels and again BRC members should make it clear to their agents that this information on sliding rental levels, even in some of the most fashionable central London locations, should be communicated now to the VOA to allow them to get 2021 Rating List correct. Companywith 125% rise on (RV) post 2017 Revaluation see 42% rise in bills 2017/8 32% additional rise 2018/9 49% rise (2019/20).

THE 2021 RATING LIST PROVIDES AN OPPORTUNITY TO CORRECT VALUES - RETAILERS AND AGENTS TO ENGAGE WITH THE VOA NOW. It seems odd that early into 2019 we should start worrying about 2021, but the valuation date for the 2021 Rating List - the Antecedent Valuation Date (AVD) - is approaching fast- on 1 April 2019 . The VOA has already moved resources internally for teams to start working on the next list. You may be of course be forgiven for thinking the 2017 Rating List has not really begun – the paltry level of numbers of Checks and Challenges (CCA), which is less than 2%, illustrates that point. Indeed, whilst the new CCA system is improving, to say the improvements are ‘glacial’ may be an overstatement. Nevertheless, the 1 April 2019 AVD does provide a useful opportunity to engage with the VOA , who certainly seem more enthusiastic to discuss 2021 values than 2017. For retailers, the pace of change between 2015 (the AVD for the 2017 Rating List) and 2019 (the AVD for 2021) has been seismic and will continue over the coming weeks to 1 April 2019. Set against a background of political uncertainty not experienced since the 1970’s, the reductions in rental values over that 4-year period (2015 – 2019) could and should lead to large reductions in Rateable Values. Many locations will have experienced sizeable rental reductions and this should feed through to 30-40% reductions in RVs in those locations, which could provide a light at the end of the tunnel for Retail. And, if sufficient pressure is put on Government to remove downward phasing, the 2021 Rating List could finally be the answer to many long-suffering retailers’ problems , allowing them to budget over the next 4/5 years on a manageable rates liability. This could lead to shops staying in business or new openings, rather than wide scale job losses that have been experienced in the last 18 months. Of course when the Government triggered article 50, the significance of 29 March 2019 in relation to the 2021 Rating List AVD 3 days later was not high on the agenda. But this does create an opportunity. The Rating Surveyors Association (RSA) Town committees have started in earnest to get underway for the 2017 Rating List and therefore a discussion should take place about the same locations for 2021 at the same time – in effect a dual list maintenance. Members of the BRC should encourage their agents to not only provide information for around 2015, but also update this, allowing the VOA to get it right first time.

20 | winter 2019 | the retailer