What does the Autumn Statement mean for the commercial property market?
The Government’s Autumn Statement is contains some interesting points, but leaves many questions unanswered, according to commercial property expert Andrew Kilpatrick.
In his statement, chancellor George Osborne announced a set of new measures on business rates, including:
- A reduction in the UBR increase due for 2014/15 from 3.2 percent to two percent.
- Extension of Small Business Rate Relief for a further year to 31 March 2015 and 12 months of extended relief after taking on a new second property.
- A £1,000 discount for shops, pubs and restaurants with an RV of less than £50,000, for two years from 1 April 2014.
- Fifty percent rates relief for 18 months from 1 April 2014 for businesses that move into shops that have been empty for a year or more.
- Payment of rates bills to be allowed in 12 monthly instalments instead of 10. Ninety five percent of outstanding business rates appeals lodged by September 2013 to be cleared by July 2015.
Andrew, of Kilpatrick & Co, said: “Some of the new initiatives are interesting, particularly the £1,000 discount for shops, pubs and restaurants with an rateable value of under £50,000.
However, there are some unanswered questions. For instance, is the discount £1,000 per year or £1,000 over two years? Whilst the 18 months incentive of 50 percent rates relief for anyone moving into an empty sho, vacant a year or more is welcome, and might help encourage new shop lettings, this would seem to penalise anyone who has been proactive and found some temporary occupations of vacant shops to mitigate the burden of empty rates.
Whilst incentives to encourage take-up of empty shops is needed urgently, it is hard to understand why the Government is waiting until April 2014 to bring this in. Why not January 2014?
As for the capped Uniform Business Rates increase for 2014/15, for most ratepayers this is mere window dressing since anyone occupying a large property – defined as rateable value £18,000+ outside London – will not benefit from the full extent of the cap as tucked away in the small print, the Small Business Rate Supplement is being increased so the standard UBR instead of having a two percent cap at 48 pence in the pound is due to increase to 48.3 pence in the pound, making the cap worth 0.2 pence in the pound for the majority of properties and ordinary ratepayers.
So for a building with a rateable value of, say, £80,000 the rates cap for 2014/15 will save £160, equivalent to a saving of 0.4 percent of their rates bill – nothing to get too excited about.
As for the Government’s commitment to clear 95 percent of outstanding rates appeals (170,000), let’s hope there is no further increase in the Valuation Tribunal’s appetite for striking out appeals.
Their latest statistics show 23,000 appeals struck out during the six months ending September 2013, which must mean there are a large number of very dissatisfied ratepayers out there somewhere.”