Friday, 15 July 2011


Back in 2009, there was much bleating and wailing about the Business Rates revaluations, for example this from the Evening Standard:

The Government is revaluing the amount companies will have to pay in each region of England. The changes will mean while most regions will pay less, London will pay an average 10 per cent more before rebates are taken into account, with offices hardest hit with a 19 per cent hike.

Politicians and business leaders are alarmed that the capital's firms face a “triple whammy” of increased charges from next April, when the revaluation takes effect. Westminster council has calculated this could add up to 25 per cent to bills in central London, once a new levy being imposed by Boris Johnson to help pay for Crossrail and an annual inflation-linked rise in business rates are included.

Businesses with offices in central London, such as Google, Diageo, Apple, Marks & Spencer and the John Lewis Partnership, could be hardest hit. The council fears jobs could be at risk if firms are forced to cut costs or consider relocation. But business rates in the South East outside the capital are due to fall five per cent, by seven per cent in the West Midlands and 10 per cent in the East Midlands.

As any fule kno, Business Rates is pretty close to Land Value Tax (especially in London, where the location rent is a huge proportion of the total rent payable), thus there's no reason to assume that it harms the economy, and if anything has a modest stimulating effect.

And the outcome?

According to Colliers in July 2011:

... it was found that increased competition for Grade A office space is likely to ensure a high take up rate in London. In the first half of 2011, 1.8 million square feet of office space was let, with the West End seeing its fastest rate of occupancy since the second half of 2005. The occupancy rate of West End office space is now 94 percent with availability declining by 55 percent.

Central London availability of Grade A space has also fallen to a 30-month low of 17 percent. It is expected that the take-up of top-quality premises has reached a peak at its current level due to few new commercial properties becoming available. The lack of available space is leading to higher rents, with some locations seeing increases in the double digits so far in 2011.

And they are still constantly building new office buildings in London, it's not as if supply is decreasing or anthing.