Update: the government has published a further consultation on business rate reform here: Gov.uk (Feb 2017)
How will letting agents be affected by April’s business rate revaluation?
In reality it will probably depend on where they are located. Many parts of the country, with struggling town-centres, will welcome the opportunity to benefit from a reduction in rates.
However, data published by the Federation of Small Businesses (FSB) suggests that nearly three quarters of small businesses in the Capital are seriously concerned by business rates.
These stark warnings come as a result of – our friend and yours – former Chancellor George Osborne’s revaluation of property. This is the biggest reform of local taxation in decades, it involved devolution of power to local government, and will allow authorities to retain an estimated £26bn of rate revenue.
According to the Federation, London is in ‘serious danger of losing its vital support system of micro and small businesses’ from April when the typical ‘micro’ business will have to pay £17,000 to cover their respective business rates.
It’s a London thing?
In fact it is estimated that 40 per cent of businesses, eligible to pay rates, expect a significant (>20 per cent) rise with London footing an additional £9bn bill over five years.
Fuss over nothing?
Offering a counter-point, Treasury minister David Gauke MP defended the revaluation, adding:
“The nearly three-quarters of businesses will see no change, or even a fall, in their business rates bills.
The fact is that the generous reliefs we are introducing mean that 600,000 small businesses are paying no business rates at all – something we’re making permanent so they never pay these bills again.
Whether on a town’s high street or in a rural community, we’ve also introduced £3.6bn in support for companies affected by the business rates revaluation – a process that is making the system accurate and fair for everyone.”
The end for high street agents?
Seemingly, overheads only move in one direction.
Furthermore, with tenant facing fees to be banned and increasing competition for landlord business could this hand the advantage to ‘online only’ agents and landlord advertising directly with portals?
Tenants seem to like the online services, why wouldn’t they? Landlords certainly like the prices, but can they really match the service provided by a bricks-and-mortar agent?
Service levels are definitely variable, and in many cases questionable. What is not so uncertain is the fact that changes to business rates will only hit those of us with rateable property and will be of little consequence to those companies who’s physical premises is limited to a serviced office space and a hosted survey in an out of town business park.
With British high streets under increasing pressure, let’s hope this isn’t the straw that breaks too many proverbial backs!