Business rates review welcome but revaluation delay will retain unfair values

27 Nov 2012

Policy area: Business rates, Town centres

Landlords in Scotland have welcomed a wider review of how business rates can be used to promote economic growth in Scotland, but criticised the decision to follow Westminster’s example to delay the revaluation of business rates.

The SPF believes the delay will disproportionately impact on smaller landlords and businesses who would probably have seen their business rates fall in 2015, and means they’ll continue to pay business rates based on top of the market 2008 rents. With high street retail in particular struggling, the postponement will see these rates locked in for a further two years rather than being readjusted downwards in line with today’s economic situation.

While the SPF has strongly opposed the severe reduction of empty property rate relief, it has welcomed the introduction of the Fresh Start scheme, where a business rates discount is offered to the occupier of a previously empty office and shop regardless of its future use, or indeed new build properties that remain vacant.

David Melhuish, director of the Scottish Property Federation, said: “A competitive business rates environment is essential as Scotland looks forward, and we welcome the Scottish Government’s review of how this can be achieved.

“However, while we welcome the review it shouldn’t be ignored that a 2015 revaluation would have shifted the business rates burden from those who are suffering most to those who have fared relatively better. By postponing  to 2017 Holyrood is not allowing the redistribution of the rates burden that would otherwise have taken place. It is a running certainty now that the business rate will be above 50p in the pound by the time of the next revaluation for many ratepayers who will be stuck on 1 April 2008 values. Rates have already outstripped rents and this decision will reinforce their increasing proportion of property costs for businesses.

“Since Westminster’s decision to delay their revaluation there has been uncertainty about how the Scottish Government would react, bearing in mind their own manifesto promise to ensure business rates in Scotland do not rise above that in England during the lifetime of this Parliament. The removal of this uncertainty for business is welcome, but we feel the revaluation should have stood”.

“The postponement means that out of date values continue to be the basis of the rates tax bill for many occupiers for an additional two years while ratepayers struggle to survive recover their business.”