Rateable values are reviewed periodically in a process known as a revaluation. Each rating list is based on rental levels agreed two years before the new list comes into effect – the Antecedent Valuation Date or AVD. Through this approach rateable values should keep track with rental market changes. The 2017 list was due to be replaced with a new rating list on 1st April 2021 but has been postponed until 1st April 2023 – the underlying reason stated by the government being that a deferment would help reduce uncertainty for firms affected by the impacts of coronavirus. There is some flawed logic here as a revaluation would have reset values so that they more closely align with pre-covid rental values which would have provided welcome relief for some sectors, instead some RVs remain massively over-inflated and are prohibitive to tenants.
Revaluation 2023 will be based on rental values at 1st April 2021 by which point the Government hope that the impact of coronavirus will be limited and that rents agreed will reflect the open market value. The impact of Covid at 1st April 2021 remains to be seen and it will take another two years before we can see how this crystalises and new rateable values are released. This won’t be the first time that an AVD has been marred by significant events and uncertainty – the 2010 list was based on rental values at 1st April 2008 when the country was on the brink of the global financial crisis.
The Valuation Office Agency are now actively gathering rental evidence and both landlords and their tenants will be receiving requests for information, driven by the statutory powers that the VOA have to collect rental information. This process is now online and is much slicker than the old paper forms, but they are a minefield for the uninitiated. The information provided will be analysed by the VOA and used to support new rateable values so its essential to present information in as clear and unequivocal a way as possible. Property deals can be complex and the questions asked by the VO don’t always readily fit the circumstances of a deal. Incorrect interpretation can lead to costly over assessment, so if in doubt ask us and we will help.
What does this really mean for owners of vacant property?
Other than the obvious issue that retail properties continue to be massively over-valued, the postponement has limited impact. Rates continue to be paid based on the RV in the rating list. There is a raft of measures in place for occupiers, including Expanded Retail Discount, but there is still no Government assistance for those with an empty rates burden.
Empty ratepayers in Wales have received a welcome reprieve for another 12 months – the Welsh Assembly planned to introduce measures that would have ended empty rates mitigation through temporary occupation at a stroke. Under current rules in both England & Wales, reoccupying empty property for 6 weeks and then vacating resets the statutory void period allowing owners and/or empty ratepayers to claim an additional 3 or 6 month void period depending on the property type. From 1st April 2022, the occupation period in Wales will be extended from 6 weeks to 6 months, ending all manner of temporary occupation schemes. The Mothball process remains unaffected and thus will be the only effective rates mitigation process in Wales.
The revaluation deferment was the catalyst for a comprehensive business rates review, the results of which have been pushed back to the Autumn of 2021. Whilst there has been talk for years about replacing business rates, it remains as an efficient tax to administer with a high percentage collection rate. The March 2021 budget provided for significant investment in making business rates digital so it looks like it will be around for some time to come – or at least for another revaluation period. Improvements to council billing systems is long overdue, but bearing in mind that councils cant even agree on a consistent format for a rates bill, it is unlikely to be plain sailing.
Business rates is a complex subject with extensive and evolving case law and legislation. Navigating through it can be time-consuming, errors costly, and difficult to unravel. The Roberts Vain Wilshaw team have extensive experience dealing with both empty and occupied property rates and work hand in hand with Mothball to provide a comprehensive and unrivalled business rates solution.