RATES RE-VALUATION COMING SOON!
08 November 2019
As the leading independent Property Consultancy in Northern Ireland, Osborne King is a natural fit to partner with Retail NI, as we share the same corporate ethos. We also have to pay property rates, and so, we are taking a keen interest in the on-going rates revaluation exercise which will significantly impact the rates we pay from April 2020. In my view other Retail NI members should be similarly engaged.
Rates bills are one of retailers’ biggest outgoings. They are based on the Net Annual Value (NAV) of the property you occupy as determined by Land Property Services (LPS) at a rates revaluation. The NAV is multiplied by the rate in the pound to calculate your rates bill. In theory the NAV equates to the rental value of your property at a specific point in time. For the 2020 revaluation, the valuation date is 1 April 2018.
Consequently, all the factors that affect rental value such as location, size, quality etc also affect the NAV. Crucially NAV’s can be challenged via a statutory appeals process, whilst the rate in the pound, set by the Department of Finance and local councils, cannot be challenged.
LPS are engaged in the difficult task of revaluing approximately 75,000 non-domestic properties across Northern Ireland. The purpose of the exercise is to re-distribute the rates burden, not to provide a means of raising more revenue. The last revaluation took effect on April 2015 based on an April 2013 valuation date, and so there will inevitably be movements in valuations across different property sectors and locations to reflect relative economic changes since April 2013.
At the last revaluation, the convenience food sector in particular saw big uplifts in valuations which caught many retailers by surprise. That partly reflected the fact it had been 12 years since the previous revaluation. Given that the gap this time will only be 5 years, it can be expected that the movement in valuations will not be as dramatic. However, whilst the woes experienced by the wider retail sector are well documented, the convenience food sector has continued to evolve and flourish. Consequently, upward movement in valuations is more likely than not.
The first visibility of what your new valuation might be is when LPS publish a draft list of valuations, online, in late November this year. The important message to remember is that whether your NAV goes up or down, you should have the valuation checked by an experienced rating valuer. Depending on whether your valuation has gone up or down by more than the average of the aggregate of the entire Valuation List, will determine whether you are a winner or a loser. As previously stated, there may be scope to challenge your valuation which, if successful, will reduce your rates liability from April 2020. Following the 2015 Revaluation, Osborne King saved our clients in excess of £2.5M, and we will be similarly motivated to mitigate our clients’ rates bills following the current revaluation.
Another significant announcement is that a comprehensive review of business rates in NI has been commissioned by the Department of Finance. This is something that Retail NI and Hospitality Ulster have been lobbying for for some time. It provides an opportunity to press for a similar rates relief scheme in NI to that introduced in the October 2018 Westminster budget which provides that retail and hospitality premises in England and Wales, with an NAV below £51,000, get one-third of their rates bills. As a member of Retail NI I hope that the review will be comprehensive and that the opportunity is taken to significantly improve a system of local taxation which is long overdue a radical overhaul.