2010 Rating Revaluation
Understanding the effects of the 2010 Rating Revaluation.
Non-domestic rates are a tax on the right to use and occupy commercial property and are based upon rental values. Relative rental values change over time and Rating Revaluations are undertaken on a five yearly basis to ensure that these changes are reflected in the non-domestic rates that occupiers and owners are required to pay. The current Revaluation came into effect on 1 April 2010 and is based upon rental values as at April 2008.
The Valuation Office Agency (VOA) now publishes the current and historic assessments for both the 2005 and 2010 Rating Revaluation. You can access your Rateable Value as well as that for your neighbours and competitors on the VOA website.
Effects of the Revaluation
The Valuation Office Agency (VOA) in England and Wales and the Assessors’ Office in Scotland have valued all commercial properties based upon the open market rental values as at 1 April 2008. While economic factors since the valuation date cannot be taken into account, physical factors can; for example, an increase in the supply of vacant property within the surrounding area is a factor that should be reflected within the new 2010 rateable value for that property.
To compensate for this increase, the UBR in England will be adjusted downwards to a figure of approximately £0.415 (Scotland £0.414 and Wales £0.409). While the average increase in rateable values is likely to be in the order of 15 percent, certain categories of property increased by significantly higher percentages. For example, offices located in the West End of London have seen rateable values double. Equally a large number of commercial properties are valued on a method known as the Contractors’ Test Approach, which is based upon the cost of constructing a replacement building. There has been a significant increase in building costs between the valuation dates for the current and April 2003 the valuation date for the previous Revaluation, which has resulted in for properties valued on this basis well in excess of those valued on the rental approach.
Transitional arrangements
The Government in England has introduced transitional arrangements which phase in major changes in liability. The amount payable on an annual basis can only increase ‘in real terms’ (after adjusting for inflation). The maximum annual increases for large properties (those with an RV in London of £25,500 or more; £18,000 or more elsewhere) are:
2010/11 - 12.5%
2011/12 - 17%
2012/13 - 20%
2013/14 - 25%
2014/15 - 25%
Maximum annual decreases are:
2010/11 - 4.6%
2011/12 - 6.7%
2012/13 - 7.0%
2013/14 - 13.0%
2014/15 - 13.0%
Small properties which are those with an RV below these thresholds are treated more favourably.
Appeals
A copy of the valuation supporting the rateable value is available for most properties on the VOA website. A few valuations are not available where the information is confidential or the valuation too complex. The VOA will provide an occupier with details of his assessment where this is not shown on the website.
Anyone with a legal interest in the property other than a mortgagee not in possession may appeal once on a particular ground during the life of the rating list. Despite the lack of any time constraints on submitting appeals, it is advisable that this is not left too long. While a successful appeal against the compiled list entry will be backdated to 1 April 2010, irrespective of when it is served, the benefit of improved cash flow and the ability to actively participate in discussions regarding general levels of value within a specific location, may be lost if appeals are lodged at a later time. It is therefore essential to take early advice in order to devise an appeal strategy and highlight opportunities where the greatest savings may be achieved.