Friday 7 October 2016

Business Rates revaluation: Government missed a right old trick.

Much squealing about something that has been in the offing for seven years, people act surprised that it actually happened. Tenants or buyers should have used a likely upwards revaluation as a bargaining chip in rent or price negotiations over the last few years.

From the BBC:

The new rating list for England and Wales will take effect in April 2017 and reflects the rental values of properties.

Overall figures for Wales show a 2.9% cut in rateable values, with shops falling by 8.8% and offices by 7%.

Across England, rateable values rise by 9.1%, ranging from a 22.8% increase in London to a 1.1% fall in the north east.


The really huge increases are in central London, where nearly all premises are tenanted. A slightly more cunning government would have frozen the amount that tenants have to pay and sent the landlord a bill for any increases (secured on the title, in case anybody wants to play the 'foreign owners won't pay LVT' KLN).

That way, landowners wouldn't be able to use actual real businesses as human shields.

6 comments:

Bayard said...

"A slightly more cunning government would have frozen the amount that tenants have to pay and sent the landlord a bill for any increases"

Well, that presupposes that the government give a stuff about the tenants, whereas, in reality they are on the side of the landlords all the way.

Mark Wadsworth said...

B, if govt is on the side of landlords all the way, why don't they phase out Business Rates instead of doing the revaluation?

KJP said...

But landlords already bear the costs of business rates. If I calculate I can only afford £50k in property costs for a viable business and rates are £20k I will pay up to £30k in rent; if they are £30k then I will not pay more than £20k in rent.
You acknowledged this when you said:
“Tenants or buyers should have used a likely upwards revaluation as a bargaining chip in rent or price negotiations over the last few years.”

Mark Wadsworth said...

KJP, yes of course, but in the very short term a tenant who forgot to factor it in bears the higher cost until he goes bankrupt or gets a rent reduction. My suggestion merely smoothes the transition.

Bayard said...

"if govt is on the side of landlords all the way, why don't they phase out Business Rates"

Now that the Tories are trying to out-UKIP UKIP, they very well might. They can't avoid pissing off half the country over the EU, so they could very well go for peak rentierism: they'll be toast at the next election whatever.

Physiocrat said...

Time to ban upwards-only rent revision clauses.