As trailed in recent press coverage, the Chancellor’s Budget yesterday held a mixture of news relevant for commercial property.
Contrary to recent press speculation the outcome of the Fundamental Review of Business Rates was not delayed. However, it was highly disappointing in its lack of genuinely fundamental change. It announced:
- A 50% business rates discount for retail, hospitality and leisure sectors up to a cap of £110,000 per business for 2022/23. This is obviously almost insignificant for large businesses with multiple properties
- A freeze in the multiplier for next year, meaning it will stay at 2020/21 levels
- Confirmation that revaluations will be three-yearly, starting in 2023
- A consultation to be expected in the coming weeks on an online sales tax, specifically to offset retail’s share of business rates
- A new property investment relief, as called for by the BRC, to give 12 months rates relief for property improvements (not three years as we called for), taking effect from 2023, subject to further consultation
- A ‘green investment relief’ – more an exemption or de-rating than a relief - this will make certain environmental improvements such as solar panels exempt from business rates. This is also subject to further consultation
- A £500m investment in the VOA for the coming three years
- Confirmation that some mooted changes to the provision of information and VOA transparency consulted on over the summer will take effect. However, proposed fees for the provision of information and making appeals, which the BRC opposed, will not proceed.
A number of other smaller, more technical reforms were announced, either in final form or signposted for further consultation over the coming 12 months. The BRC will engage with these and the broader issues about the overall burden of rates which was not properly addressed by the review.
Helen Dickinson, the BRC’s CEO, said:
“It’s a mixed bag of announcements from the Chancellor which falls far short of the truly fundamental reform that is needed and was promised in the government’s 2019 manifesto.
“With firms still stuck on property valuations from 2015, the move to a three-year revaluation cycle, supported by a properly funded VOA, is welcome and is a clear acknowledgement that rates have fallen well out of kilter with the wider property market. The freeze in the multiplier is positive, though the evidence is clear that the current rate – over 50% in England – is already far too high.
“We also welcome the property investment relief and green investment relief, both of which the BRC has called for, which will provide some support for much needed investment in green technology and property improvements.
“While the Government’s 50% bridging relief for 2022/23 may prove to be beneficial for the smallest businesses, it will do little to support the businesses that pay two thirds of retail business rates and employ 1.5 million people. With no reduction in the burden, this will lead to the unnecessary loss of shops and jobs and fails to incentivise investment in all parts of the country. This is bad news for every member of the public who wants a vibrant high street in their local community, with retail at its heart.”
The review will be discussed in depth at the BRC's Property Community meeting on Wednesday 3rd November at 3pm. Please contact me if you would like to attend.