Retailers are urging the government to tear up a bill that could see business rates set for at least three years based on pre-Covid-19 rents.
Under the Non-Domestic Rating (Lists) Bill, the next revaluation of business rates will take place on 1 April next year based on rents that were payable on 1 April 2019. It was introduced in the House of Lords on 18 March this year and is awaiting its second reading.
The bill was intended to help retailers by bringing forward the next revaluation from 2022, providing more up-to-date ratings sooner. But industry groups have warned the timing is now disastrous, because it means the decisions will be based on open market rents a year before the pandemic struck.
The Association of Convenience Stores and the British Independent Retailers Association have called upon Chancellor Rishi Sunak to withdraw the bill and push the revaluation back to 2022. They are also calling for it to be based on rents payable a year earlier, in April 2021, rather than two years.
More than 20,000 shops are destined to close for good this year, 27% more than in 2019, according to a recent report by the Centre for Retail Research.
A fair business rates revaluation must take account of “profound changes in the retail industry and property market”, according to ACS CEO James Lowman.
“We need to make sure that business rates reflect the present and the future, not the past,” he said.
“By moving back to the original revaluation timetable, the Valuation Office Agency would have a chance to assimilate these changes into their rating decisions, meaning we end up with a more relevant and fair set of valuations.”
British Independent Retailers Association CEO Andrew Goodacre called the bill “disastrous for all businesses that pay non-domestic rates”.
“We must have the reference point for determining future rates bills at a time post coronavirus so they are an accurate assessment taking into account the full impact once this crisis has passed.”
Alex Probyn, UK president at property advisor Altus Group, said: “A revaluation in 2022, based upon open market rents in 2021, would provide a complete reset of rateable values, taking into account the state of the market after the crisis has passed.
“It is far more beneficial economically to tie the new rateable values, under the next revaluation cycle, to the post Covid-19 emerging economic circumstances with physical circumstances a year in advance when matters will have more chance of being back to normal and business confidence has started to return.”