Viewpoint: Non-domestic rating system and Prior Agreement
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To prior agree or not to prior agree? That is the question. With profound apologies to William Shakespeare for the misuse of his most famous phrase, the question of prior agreement now sits at the very heart of the future of the UK non-domestic rating system.
Let’s take a step back. For the uninitiated, Prior Agreement is the agreeing between the Government’s Valuation Office Agency (VOA) and the ratepayer (or ratepayer’s agent) of valuation templates, known as Schemes of Value, which standardise the way in which similar properties or hereditaments are valued, and support the determination of rate liability for such property. A Scheme of Value is designed to take into account those characteristics of a property which influence rental value and, from the VOA’s point of view, achieve a degree of accuracy such that the cost of correcting any error in the valuation would be greater than the potential for reduced liability. In short, Prior Agreement provides a route towards the Holy Grail of accurate rating valuation for each and every one of the 1.8 million non-domestic, rateable properties in the UK.
Whilst the VOA’s long-standing ethos of Right First Time, like the pot of gold at the end of a rainbow, was always going to be more of a worthy vision than an achievable reality, I believe a national non-domestic rating process, built upon a robust process of Prior Agreement, is an achievable prospect. However, a substantial change of mindset is required, with each constituent player in the NNDR process agreeing to play its part. Two specific aspects of the drive towards Prior Agreement require much focus:
- The VOA must actively promote Prior Agreement, making it clear that the early involvement of agents is essential. By tapping into the market knowledge of agents, the VOA’s assessments will undoubtedly be more accurate. More importantly, if the ratepayer knows their assessment was prepared in cooperation with their agent, they are more likely to have confidence in its accuracy.
- Ministers, at Communities and Local Government (CLG) and the Welsh Assembly Government (WAG), together with the VOA and professional rating agents must work more harmoniously to persuade clients that it is in their interests for future rating lists to be as accurate aspossible, and that the only way to achieve this is to involve agents in the preparation of future lists. This will require a major change in the mindset of clients since they have become used to paying their agents out of savings achieved. Convincing clients that a change in the remuneration model will have long-lasting commercial benefits requires a wholehearted effort by all involved.
To achieve this change in mindset, all parties must accept the need for change and positively promote it. Ministers, the CLG, WAG and VOA must make it clear that they welcome and encourage the involvement of agents in the valuation process, whilst agents must positively demonstrate the benefits of Prior Agreement to their clients.
Read more articles on related subjects in Rating In Brief
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