Retailers win huge rates cut as firms quit site

The mixed-use site, which opened in 2008, has suffered from a number of businesses leaving the area, resulting in a 72 per cent vacancy rate at its peak.

The cut in rates for the remaining occupiers, including Kashmiri restaurant Mumtaz and Cafe Aagrah, was the highest recorded in a new study by UK ratings firm Dunlop Heywood, based in York, which looked at 30 successful rating appeals held across the North and Midlands.

Empty units nearby, the loss of an anchor store or increased floor space and competition from new buildings have all formed parts of successful appeals over the last 12 months.

Increasingly, the national picture shows an unprecedented rise in the number of retail units now vacant, with areas in Yorkshire particularly blighted. Another recent study found that Yorkshire and Humber had the highest percentage of vacant shops at 18.1 per cent.

But as tenants move out, Dunlop Heywood says a new opportunity appears in their wake with the possibilities of a ratings review based on a 'material change in circumstance' (MCC) for the nearby tenants or landlords.

It found an average reduction of 16 per cent was achieved by retailers, with empty space cited successfully as the MCC in 18 cases.

In three cases the loss of a key anchor store was crucial. The loss of TK Maxx at the Leeds Shopping Plaza saw one nearby tenant gain a 15 per cent rating reduction as a result.

In nine examples, new competition in the locale was claimed and four applications also warranted a pioneering allowance for being the first tenants on site.

In three cases the closure of a local Woolworths store was specifically highlighted as a MCC factor.

Stuart Hicks, director of Dunlop Heywood, said: "What this study shows is that successful appeals are being launched across the UK and there is a real opportunity now for shopping centres and tenants to look to their local environment for an MCC that will open the door for a successful rating valuation appeal."

Other successes included a 20 per cent reduction at Princes' Quay shopping centre in Hull for the first tenants until 75 per cent of the units are filled.

Businesses at Clarence Dock originally appealed for a rating review when occupancy fell to 50 per cent and more recently, as the situation has got worse, it appealed again.

Mr Hicks said: "As things improve, as they surely will at some point, the rates will go up again. What has taken some time has been translating the percentage of vacancies into an allowance to reduce the ratable value by. Through a number of tribunals we are slowly getting there."

He added: "It's all about location, it really depends on where you are as to whether you'll receive a reduction as a retailer. For example, the Victoria Quarter in Leeds is doing really well in terms of occupancy but other areas are faring pretty poorly.

"With the state of the economy and doom and gloom out there with job losses in the public sector and purse strings tightening you've got to question when the recovery is going to be. I don't see it being any time soon."

The burden of business rates has been exacerbated in recent years with the withdrawal of empty property rates relief in 2008, which means that landlords and tenants who have vacated premises now have to pay rates for empty buildings.

Mr Hicks said: "Empty rates is a tax on hardship. Now that we've had the crash, people are really suffering."

Some landlords are taking drastic measures to avoid the expensive charges, including demolishing buildings, although this is not usually a measure adopted by retail landlords. "It's unlikely that a shopping centre with lots of different units is going to be demolished," he said.

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Lizzie Murphy

clarence dock: Rates cut.picture: bruce rollinson