Retailers and retail property organisations have hit out at the government’s decision to postpone the business rate revaluation for two years.
Deferring the revaluation from 2015 to 2017 amounts to a “shot in the foot for the retail industry” and promises “five years more of business rate pain”, say retail trade bodies.
The British Independent Retailers Association said the postponement would “further extend the pain that retail is experiencing and that has left one in seven shops empty”.
Deputy chief executive Michael Weedon said: “Rents are falling now for new leases but rates will go up again by another £175m next year for retail if the government doesn’t do the right thing and freeze the rate. If it does go up it will just turn the rack on those in existing leases.
“There should be a revaluation now, let alone in 2015 and certainly not in 2017. Five years more of business rate pain will be too much for ailing retailers.”
He continued: “The current system harshly penalises town centre shops, with retail paying 28% of all business rates, and keeps on hurting it with increases based on RPI. Rates are supposed to relate to rents and the two are moving further and further apart all the time. With half of all shop leases coming to an end by 2015 and rents adjusting accordingly this arbitrary tax will do increasing damage to the high street that the government professes to be determined to save.”
Meanwhile, the British Property Federation said the decision meant high street retailers would be locked in with what it calls “top of the market 2008 rents” for a further two years rather than being readjusted downwards in line with today’s economic situation. It also increases business uncertainty, it argued, with the fear of big changes to rates when the revaluation does finally arrive.
“The decision to delay the revaluation until 2017 is a real shot in the foot for the retail industry,” said BPF chief executive Liz Peace.
“A revaluation should shift the burden from those who are suffering to those who are prospering. By postponing, the government is not allowing the downward adjustment that would otherwise take place for suffering retailers.
“The postponement embeds injustices in the current system, where businesses pay top of the market rates in a depressed climate, for an additional two years at the worst possible time.”
She added that revaluations should be more frequent, not less so.
The British Council of Shopping Centres has also joined the protest, saying the postponement would “have a very negative impact on retailers’ performance and high street resurgence. Business rates are currently crippling many retailers’ margins and the 2015 revaluation would potentially have led to some positive readjustment. The industry will be shocked by this decision.”