Business

High Street shops 'face rates shake-up', says report

Liberty store in London Image copyright Getty Images
Image caption Shops in parts of London could see big rates increases, it is warned

High Streets in the UK are set to face radical changes in the amount of money they pay in business rates in future, new research suggests.

Property consultant Colliers International found 76 out of the UK's main towns and shopping centres will see an increase in their rates bill.

Some parts of London will see an increase of more than 400%, it says.

The winners, mainly in the Midlands and north of England, will see business rates plummet, it adds.

Newport in south Wales could see bills fall by some 80%, the report found.

'Act now'

"The business rates losers are found only in London and the South East and it could turn highly profitable stores, including independent retailers, into failing businesses," said John Webber, ratings expert at Colliers International.

Business rates are a tax based on property values. They are usually revalued every five years.

The last revaluation in England and Wales was in 2010 but this year's revaluation was controversially postponed to 2017.

The Government's Valuation Office Agency is busy updating its figures but Colliers has done its own research on how the rating revaluation will affect High Street retailers, based on analysis of rental data from 2010 to 2015.

Regional differences

It says it found big variations across the country:

Marlow faces an increase of 58% in rateable value, followed by Guildford at 42%, and Brighton up by 18.5%.

But Rochdale in Greater Manchester, hit hard by the economic downturn, will see a decrease of 30%. Kidderminster in the West Midlands is down by 42%.

And in London, it is Dover Street which is the biggest loser, with an increase of 415%. Brixton faces a potential 128% increase in rateable value, although Ealing will see a decrease of 46%.

Mr Webber believes some retailers are going to be in for a nasty shock when the business rates change in 2018.

"Business rates is a major cost for retailers and it's really important that they are able to budget for these once-in-a-generation changes," he adds.

Winners and losers

The government has promised a review of the current system and will deliver its findings by next year's Budget.

Business rates are expected to raise around £28bn for the Treasury's coffers this year, more than the sum it raises in council tax.

Retailers currently pay a quarter of this bill, more than any other sector, and are demanding wholesale change, saying the current system is unsustainable.

They say it is an arrangement that always produces winners and losers for individual businesses.

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