I had the pleasure of attending this year’s IRRV annual conference in Telford where we heard from Alan Colston, the Director of National Specialists Unit (NSU) from the Valuation Office Agency (VOA). Alan provided a very comprehensive overview of what the latest revaluation meant for various business sectors across the UK and how it brought payment rates in line and up to date some seven years after the last revaluation was carried out.
Revaluation – the task at hand
Alan was quick to note the process was not just about raising incomes but about redistributing them. It was also one of the single biggest projects carried out by the VOA covering 1.97 million properties with a collective rateable value of £63 billion, covering everything from airports to zoo’s. Five hundred thousand properties alone accounted for the retail sector and rather surprisingly a further 18,000 covered beaches.
Alan noted that over 300,000 rents were reviewed and analysed to help arrive at the values decided and part of the process involved agreed schemes with key industry sectors, he also commented that the VOA continue to monitor the market on an ongoing basis. One of the most comprehensive agreed schemes represented the pub industry with five trade bodies and forums involved. Other agreed schemes were negotiated with star rated hotel chains, caravan hereditaments, petrol filling stations, theme parks and leisure attractions, airports and ports as well as electricity companies and hydro electric schemes.
There are also still ongoing discussions in other sectors such as bingo halls, cinema’s, fitness centres, football and rugby stadiums as well as universities where agreement on rates is hoped to be reached prior to April 1st 2017 when the list comes into force.
On a positive note Alan stated that 600,000 businesses will pay no business rates at all next year because of the small businesses rates relief.
As a quick reminder, the majority of rateable value is contained within the local rating lists (accounting for over 95% across England and Wales) and these are managed by local billing authorities. The remainder is made up from the central list containing rating assessments for the network property of major transport, utility and telecommunications undertakings and cross-country pipelines.
Looking at local lists held by each billing authority in England, overall the list of rateable values has increased by 10% compared to a decrease in Wales of 3%. In comparison the central list showed an increase in 40% in England compared to just 25% in Wales.
Overall Alan noted it was generally bad news for London, telecoms giants and around 25% of pubs but good news for food stores. All categories of property within London and the South East showed increases and retail in London is up 42% compared to just 6% outside of London.
Specialist category codes are given to identify different classes of property, enabling the VOA to supply such statistics as a 12% increase in rateable values for offices and 19% increase for four star hotels.
Largest increases occurred in telecoms, gas, stud farms and livestock markets, whereas largest decreases occurred in areas like photo booths, iron and steel works, nuclear establishments and telecom switching centres. Alan commented on decreases being most prevalent where technology is becoming obsolete or in the case of the steel works, (which is down by 40%) where materials are being sourced cheaper elsewhere, resulting in business closures.
What impacts Valuations?
A number of factors in recent years have impacted valuations, most notably the advent of internet shopping, click and collect and home delivery. This has led to the growth of convenience stores, more regular trips to these stores for collections and diversification in large retail food stores, where you now have coffee franchises and electrical good outlets, where you can buy all you need in one store.
More offices have opened up in England, prompted by trends towards entrepreneurial, smaller start-up businesses as well as mobile and home working required by a more flexible workforce. Older office buildings are struggling in favour of newer, better more accessible offices for the more mobile, transient worker.
In line with technological advances we are also seeing the decline of newspaper printing works and buildings used for industrial purposes, whereas exhaust and tyre centres are doing well alongside hand carwashes, motorway service stations and petrol forecourt shops, perhaps reinforcing the notion of Britain’s more transient, mobile workers.
Although pubs are seeing a continuing downward trend the VOA have noted a rising quality in those that remain as they diversify and compete for business, there is also something of a resurgence of microbreweries and free traders. Hotels are seeing rising trade due to an increase in staycations and the growth of cheap air travel thanks to declining fuel costs.
Sport stadiums are doing very well thanks to their diversification into other uses for example concerts and exhibitions. Civic properties have also undergone somewhat of a rationalisation of estates with increases in ambulance stations and cemeteries some of which is being driven by a shortage of land. There has also been big investments in schools and academies and some of this is being fuelled by overseas students and a strong development of universities and joint ventures.
Although quite a lot of the bulk of the work on valuations has now been completed, following some final tweaks, reviews and ongoing monitoring of markets plus continuing discussions on pre-agreed schemes, the full and final compiled ratings list will be published and live from 01 April 2017.