Time to revaluate

Rating legislation in the United Kingdom requires for all non-domestic property to be revalued on a regular basis. This normally occurs every five years and the last revaluation in Scotland, England and Wales was effective from 1 April 2010 (Northern Ireland has been delayed until 1 April 2011).

Revaluation is similar to a rent review on the property. However instead of the property being reviewed in isolation, all non-domestic properties are reviewed on the same day. In England, the exercise amounts to the mammoth task of revaluing over 1.7m properties.

Over a period of time, rental values for different categories of property move at a different pace and even in different directions. These rental movements are assumed to normally reflect the economic state of the business that occupies that particular category of property and therefore the ability to pay.

The antecedent valuation date is the date that all assessments for the relevant List will reference to for rental levels. For all revaluations since 1990, it has always been set two years prior to the list coming into force and for the 2010 Revaluation it is no different.

The 2010 rating list rateable values became effective on 1 April. These assessments are based on net rental values as at 1 April 2008. For many categories of property, 1 April 2008 was either at the recent height of the property market or certainly very close to it. This has been reflected in the 2010 Revaluation assessments. In England, the statistics issued by the Government show that there has been a widely differing movement of rateable values (RV) dependent on the property sector and geographic location. As a snapshot of how variable results are, the RV of offices in Yorkshire and Humberside has risen nearly 15 percent, retail in the South West has risen over 22 percent while RV on industrial in the East Midlands has fallen by over two percent. On the whole however RV have risen and in some cases significantly so.

Yet there is some good news to this news. The multiplier for 2010/11 in England will fall to 40.7 pence for small hereditaments. Small hereditaments are those with RVs less than £25,500 in Greater London and £18,000 elsewhere. And in England, there are transitional arrangements to phase in large increases and decreases in rate liability, with an increase of 15 percent taking four years to achieve. The scheme will be self-financing however, so those properties that should have significant decreases in liability will be penalised as they slowly reach their new level.

For properties with RV at or in excess of the small hereditament threshold, there will be an addition of a small business rate supplement. The Government has announced that the level of this supplement will be 0.7 pence. All properties within the City of London will pay a 0.4 pence supplementary rate. Neither of these supplements will be subject to transition. There is no transition in either Scotland or Wales where the multiplier will be 41.4 pence and for 40.9 pence respectively.

New legislation has been introduced to enable top tier local authorities to levy a business rate supplement to
help fund major infrastructure projects. To date, only one business rate supplement has been announced: two pence on all properties with RVs greater than £55,000 within Greater London. This levy will not be affected by any transitional arrangements and it is likely to be in place for at least 24 years. The proceeds will be used to fund Crossrail.

Due to the financial burden this could place upon businesses, there is a right of appeal against  a property’s RV. The main areas likely to be covered by any appeal are incorrect factual information, incorrect unit of assessment, incorrect level of value and material change of circumstances.

An appeal against the 2010 list assessment can be lodged now. However, because transition will be based on current rate liability, it is important to ensure that a final check is made on your 2005 assessment.

In any respect, securing that their RV is accurate is a key way for businesses to save money.