Business rates hitting firms in North hardest

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YORKSHIRE’S businesses are being forced to carry a heavier rates burden than their rivals in the south, at a time when many retailers are fighting for survival, according to a leading commentator.

Robin Ellis, of CBRE, made the comments after a survey found that business rates were the cause of the largest number of complaints among companies based in Britain’s market towns.

The study, which was carried out by the national charity, Action for Market Towns (AMT), also discovered that small businesses were worried about high rents, the availability of car parking and competition from out-of-town retailers.

Last year, many businesses were angered by the Government’s decision to postpone the next business rates revaluation in England to 2017, a move which some critics believe will make life tougher for people working on Yorkshire’s high streets.

The current rating – set in 2010 – is pegged to rents achieved in April 2008, which was close to the top of the market. Many property professionals believe the revaluation should go ahead in 2015 as planned. This revaluation would be linked to rents in April this year, which would probably be much lower than those recorded in 2008.

Mr Ellis, the director of national rating and lease consultancy at CBRE Leeds, said yesterday: “Historically, rates have been an important element of occupational costs; typically accounting for around 45 per cent of rent.

“However, as rents have fallen the rates burden has increased as a proportion to around 80 per cent of rent. It is understandable that occupiers feel so aggrieved.

“If all categories of property had fallen uniformly then the postponement of the next revaluation would not be such an issue.

“However, values in our region have dropped far more than in many areas of the south east. For example, over the past five years rents on prime retail units in Commercial Street, Leeds have fallen by around 35 per cent. In comparison, rents on Oxford Street in London’s West End have continued to rise. Such examples of the movement of rental values between north and south are not restricted to the retail sector.

“Businesses in Yorkshire are undoubtedly bearing too great a rates burden, and a revaluation would help to rectify the obvious unfairness in the system.”

AMT surveyed businesses in 205 towns across the UK and asked them to name the most pressing issues affecting their town or high street, and what action they wanted to see from the Government. Business rates were described as the most pressing issue by the majority of respondents.

According to AMT, representatives from more than 100 towns said the Government should review the “flawed and outdated” business rates model and ensure there was a level playing field with regards to business rates for high street and online retailers.

Chris Wade, AMT’s chief executive, said: “We have listened to towns across the country, and the message is, that if the Government is serious about saving the high street, it needs to review how business rate levels are set. This would play a part in levelling the playing field so that our towns can be competitive and find creative solutions to bounce back.”

AMT and other organisations recently issued a briefing note to members of the House of Lords, expressing concern about the postponement of the revaluation of business rates.

The note said: “The postponement will unfairly penalise hundreds of thousands of businesses by requiring them to pay excessive levels of tax for an additional two years, in order to subsidise those in more prosperous areas.

“This will harm businesses in regions and sectors of the economy that have underperformed relatively since 2008, and so (it) will have a particularly devastating impact on struggling high streets.”

A Department for Communities and Local Government spokesman said: “We are committed to supporting business and helping rejuvenate the nation’s high streets, which is why we’ve doubled the level of small business rate relief, given local authorities powers to grant business rates discounts and simplified the process for claiming small business rate relief.

“Half a million businesses in England are expected to benefit from these measures. Our Town Centre First planning policy is helping landlords make better use of their empty properties by allowing them to lease for shorter periods or by making it easier to convert into residential facilities.

“This will help bring new business into the high street and increase resident population and local footfall. We have also launched a Future High Street Forum to bring together leaders across retail, property and business to provide advice and support to towns across the country to help their high streets thrive and prosper.”