CLIENT AREA

"It is without hesitation that I would seek to commission Chase & Partners for future work for this Council and would recommend you and your company to others."


- Adrian Colwell, Head of Strategic Policy, South Northamptonshire Council


The Rating Revaluation Postponed

23rd January 2013, by CPAdmin

Dear Minister

 

Your article in Property Week of 7th December 2012 came something of a surprise to me as in my experience Ministers rarely descend into detail let alone do so in writing but tend to focus on the bigger picture and strategy. This did of course make a pleasant change but the generosity of this approach appears to have potentially exposed the frailties of defensive statements made justifying the postponement of the rating revaluation by two years and claims of a common sense approach, as having little if no substance.

 

The response from Jerry Schurder, one of the Country's leading rating specialists, the following week reflected on a number of inaccuracies of the facts which the Minister had based the decision for postponement. In addition Mr Schurder queried who were the "many" who could see the sense in the Government's actions? On this latter point detailed submissions were sent to Government by the trade bodies of BCSC, BPF and BRC which perhaps understandably the relevant civil servants may have regarded as promoting a specific position. However that does not explain the rejection of advice from the independent bodies of the Association of Town and City Management (ATCM) and RICS both of whom are independent professional bodies with no axe to grind other than to assess what is the right policy to adopt. On this simple analysis the facts suggest that the "many" to which the Minister arbitrarily lays claim for support, is reduced to the few.

 

Perhaps of greatest concern is the suggestion that the postponement leads to greater stability. The well respected Bayliss Report of over 20 years ago considered the subject of revaluation and correctly identified that regular revaluations were the only basis for maintaining stability. Miss or postpone a rating revaluation and it almost invariably leads to the law of unexpected consequences arising. Further no mention was made of the structural change from internet shopping which is now affecting physical retail property. The Government have only just begun to wake up to the problem of cross border international corporate taxation issues but still seem incapable of talking the taxation status of offshore internet sales portals such as Amazon which are continuing to reduce expenditure in shops and drive down pedestrian flows in our high streets.

 

One clear market example I can point to is the fortunes of a shop in the prime retail frontage of Canterbury. In the past 5 years the "Market Rent" has dropped from £125,000 per annum to £80,000 a fall of some 35% representing the industry average excluding London and certain other hot spots. Over this same period of time the rates payable have increased from £30,000 per annum to £50,000 and will continue to rise in line with inflation with the RPI escalator at a time when there is price deflation and salaries are falling. How can the Minister say that this represents a neutral position? Surely it must be the reverse. Does the Minister not realise that many retail property is owned by Pension funds, either directly or through the share ownership of the Property Company owners and that consequently ordinary pensioners are subsidising a taxation policy that has failed to respond to changing times and significant industry shifts. The retail property industry is no longer the golden goose but quite the reverse as the Portas review pointed out and Government accepted. Town centres are in crisis. Against this background how does the rating revaluation postponement reflect the Government's policy to reinvigorate town centres where average shop vacancy rates at over 14% are now the highest on record. This does not represent joined up thinking.

 

It appears to me on the facts that the Minister has got his detail wrong, has misinterpreted the position of the market, has failed to recognise the structural changes in the retail sector and has ignored the advice of the "many" but has been encouraged to make a flawed decision promoted by the few.

 

Given that the Minister has been keen to enter the debate on a detailed ground but where the facts appear to seriously undermine the postponement decision, would it not be sensible to have a round table discussion with the many who believe the Government has got it wrong so that at least the true impact of the postponement can be evaluated and perhaps a more sensible outcome identified. As it stands the losers may well be more than the Government has currently bargained for and could even include itself.

 

 

Graham Chase

Chairman Chase & Partners

RICS Past President

President ATCM