Given that I can find no one with a positive word to say about the chances that the Government’s rates review, already delayed, will have anything concrete to say on the outrageous inflation in rates, let’s assume it will be a damp squib.
Retail rates are now higher than rent, announced the Grocer today, which is odd given that rent represents I would say at least 75% of the value in a lease, possibly higher. Rates on the other hand deliver what precisely? The built environment that councils are largely responsible for is to the benefit of all residents and visitors and falls disproportionately on retailers, as the BRC and letting agents have been saying for years.
Rents down, rates up
Proof is to be found wherever you care to look. The experience of a landlord friend of mine shows that in Canterbury and Newbury, commercial rents have fallen by about 60% in real terms over the past twenty years. Business rates which used to be about 26p in the pound back in the 80s are now about 50p so an effective doubling in real terms. Another view comes from the FT which points out that the tax rate has risen from 34% of rateable value to more than 50% in the 30 years since they were introduced.
My friend’s blunt assessment? “Perhaps someone in government will click that they just can’t keep taking without giving!”
The British Retail Consortium has called for a fair playing field on rates and continues to lobby for change. Any shortfall resulting from levying a fairer rate on bricks and mortar retailers could easily be recouped from online retailers. Will anyone embrace this idea?