Business rates have become a real issue for many struggling businesses up and down the country.
As many landlords with business premises are finding, particularly high street retail shops and offices, these rates bills are affecting tenants’ ability to keep up their rent payments.
Empty shops and offices have had a big impact on business rent levels and landlords are finding that in many locations rents have come under great downward pressure.
Despite the recent up-turn in the economy, there are still many locations in economically challenged locations, areas of relatively high unemployment and deprivation, where trade volumes are low, and may never fully recover.
Structural changes perhaps accelerated, but no particularly caused, by the recession, involving out of town and Internet shopping, are having a major impact on the way retailing is going in the UK.
Some areas are affected much more than others when it comes to business rates.
Business owners and retailers in the east of England, the Midlands and the Northwest are being hit hardest by the government’s decision to delay its review of business rates due next year in 2005, to 2017.
A review would inevitably result in rate reductions as re-assessed values would bring payments more into line with reduced market rental values – as it stands, some businesses are now paying more in rates than they do in rent.
This explains the government’s reluctance to change the status quo, with business rates currently bringing in tax revenue of around £22billion pounds.
A recent survey by Jones Lang LaSalle (JLL) shows that those areas which are most economically challenged, and where some high streets have been devastated by the recession, are the ones that business rates are impacting most.
The study shows that those areas paying more in business rates than they should be; 63% are in East England, 56% in the east Midlands, and 55% in the Northwest are the areas most in need of help.
Despite concessions to be introduced following the Chancellors Autumn Statement, many in the industry are calling for a major review of the business rating system in the UK.