17 Oct 22 by Jordan Kennedy
Rating revaluations ordinarily take place every five years and are carried out in an effort to maintain fairness in this system of taxation, by redistributing the total rates payable to reflect changes in the property market. The 2017 rating list was due to end in April 2021 but, in May 2020, the government announced the postponement of the 2021 revaluation, citing the need to remove the uncertainty this would create for businesses impacted by the COVID-19 pandemic. This was, arguably, a disappointing decision. A 2021 revaluation would have adopted a valuation date during a period of relative economic stability (April 2019) and would have provided an earlier opportunity to redistribute business rates to reflect the significant changes in sectoral performance, the retail sector in particular.
The 2023 Business Rates Revaluation is imminent
– but what does this mean for you?
You may or may not know, that this revaluation should actually already have happened. However, in July 2020, the Government announced the next revaluation would take effect from 1st April 2023.
The valuation date for the new rating list, which will come into force on 1st April 2023, is 1st April 2021 and rateable values in each sector will therefore reflect the open market rental value as estimated by the Valuation Office Agency (VOA) on that date. This valuation date was, of course, during a period of national lockdown, with non-essential retail in England unable to re-open until 12th April and hotels/hospitality unable to re-open until 17th May.
A 2023 national revaluation therefore presents the VOA with perhaps the most challenging backdrop in its history. Across much of the commercial property market, the pandemic has resulted in significantly fewer rental transactions at the antecedent valuation date, the evidence of which is required to undertake a fair and accurate rating revaluation.
Undoubtedly key sectors such as retail have been impacted at a fundamental level, with Covid-19 accelerating the decline of the traditional retail sector. Conversely, we have seen an increase in industrial rents in the intervening years since the last revaluation. The biggest reductions in rateable value are therefore likely to be seen in the retail sector, whilst the opposite is expected in the industrial sector, which will likely shoulder the greatest increases. The office sector, certainly in the South-West, will likely see minimal change.
Evidently, the 2023 revaluation looks set to deliver a long-awaited rebalancing of the tax base, to the benefit of traditional retail, but at a cost to industrial and logistics.
We are expecting the draft 2023 rating list to be published towards the end of November 2022; at this point, businesses may have an opportunity to alert the VOA to any errors included with their summary valuations. The ability to lodge formal appeals will follow when the new list comes into force.