Transcript Make business rates your business

Business Rates in
East Cambridgeshire
Monday 31 January 2011
NON-DOMESTIC VALUATIONS
FOR RATING
Make business rates your business
Mark Catley MRICS FAAV
Valuation Officer, St Albans Group
Duncan McLaren MRICS Dip Rating
Team Leader, Rating Cambridge
Valuation Office Agency
What the VOA does
Central government Executive Agency
Professional property valuations:
 1.8 million non-domestic ‘rateable values’ for business
rates
 22 million domestic council tax bands
 153 local housing allowance zones
 75,437 (2008/09) fair rents for private rented sector
tenants
 Property valuations for HMRC tax purposes
 Strategic asset management and energy
performance certificates for the public sector
Business rates – the basics
Tax paid on business premises and
other non-domestic properties
Nationally pooled, then redistributed
between local authorities in proportion
to adult population
Funds contribute directly toward cost
of local authority services
More information at:
www.businesslink.gov.uk
Business rates – who’s who
This is set by the
government
Business rates bill
EXAMPLE
rateable value
This is set by the
Valuation Office
Agency
£20,000
multiplier
£0.414
bill total
£8,280
This is
calculated and
collected by East
Cambridgeshie
District Council
 Valuation Office Agency
 assesses rateable value
 Communities & Local Government / Welsh Assembly Government
 sets policy framework, rate reliefs and national multiplier
 Local Authority
 uses rateable value in calculation of rates liability, applies
reliefs/discounts, issues bills and collects payments
The size of the task – nationally
Total of 1,793,967 properties to value
• bulk” classes to be valued include:
• 510,000 shops (including banks, post offices, etc):
• 287,000 offices;
• 195,000 warehouses; 242,000 factories, stores, etc
• other classes with significant numbers:
• 66,000 licensed properties;
• 41,000 advertising rights;
• 47,000 car parks;
• 38,000 hotels;
• 33,000 restaurants/cafés;
• 30,000 schools and colleges;
• 28,000 hospitals/clinics
• “non bulk” classes include:
• everything else from A to Z (airports to zoos)
The size of the task – Cambridgeshire
• bulk” classes to be valued include:
• 5,480 shops (including banks, post offices, etc):
• 5,525 offices;
• 2,900 warehouses; 3,800 factories, stores, etc
• other classes with significant numbers:
• 805 licensed properties;
• 345 advertising rights;
• 180 car parks;
• 270 hotels;
• 40 restaurants/cafés;
• 750 schools and colleges;
• 390 hospitals/clinics
• “non bulk” classes include:
• everything else from A to Z (airports to zoos)
The size of the task – East Cambridgeshire
Total of 2,250 properties to value
• bulk” classes to be valued include:
• 425 shops (including banks, post offices, etc):
• 340 offices;
• 265 warehouses; 380 factories, stores, etc
• other classes with significant numbers:
• 80 licensed properties;
• 5 advertising rights;
• 20 car parks;
• 25 hotels;
• 40 restaurants/cafés;
• 65 schools and colleges;
• 35 hospitals/clinics
• “non bulk” classes include:
• everything else from A to Z (airports to zoos)
How do we value?
Rateable value is our assessment of the
rental value as at 1 April 2008
Gather and analyse rental evidence and
property information to set rateable values
In some cases we use trading receipts to
establish rateable value…
…in others we use building and land costs
Aim is always to establish rental value
Applying the rateable value
For offices and industrial properties, rent
generally distributed across different parts of
the property on £/m² basis
workshop area
office
Shops are slightly different…
In a shop the front part is the most
valuable – this becomes zone A
£/m² reduces across the retail area as
you move further back from the front
A
B
retail area
C
office
storage
Revaluation
1990
2005
2000
1995
2010
The five-yearly revaluation maintains
fairness in the rating system by redistributing
liabilities according to any differential
movement in values that has occurred in
the market over the five-year period
Has taken place regularly since 1990
Not about increasing taxes!
 An increase in rateable value does not necessarily
mean an increased rates bill
 The national multiplier (UBR) is the other key factor
used by local authorities to calculate rate bills
 Multiplier adjusted so that the total business rate
stays the same, only allowing for inflation
 In England the multiplier for 2010/11 is 41.4p, down
from 48.5p in 2009/10
 In Wales the multiplier for 2010/11 is 40.9p, down
from 48.9p in 2009/10
1 April 2008 values – why?
Date fixed two years in advance to ensure
that information to support the valuation
process is available
Common date ensures fairness and is the
same for all ratepayers
Rental values in 2010 may be lower than
they were in 2008 but:
2010 multiplier significantly reduced
rates bill depends on relativities across all
rateable values at valuation date, not on
changes in the rental market between 2008 and
2010
Business rate reliefs and discounts
Transitional relief for 2010 list
Small Business Rate Relief
small business rate multiplier
percentage discounts
Additional reliefs for charities, some
non-profit and some rural businesses
Ensuring accuracy
Use wide variety of evidence of actual rents
paid
Research the rental market
Valuations carried out at local level
Valuation date
May be seen as a ‘high’ point in the market
Multiplier has been reduced to ensure no extra
money is raised at national level
Changing the date would mean the multiplier not
reduced so much
Date is just the point to identify relativities
Ensuring accuracy
Use wide variety of evidence of actual rents
paid
Research the rental market
Valuations carried out at local level
Valuation date
May be seen as a ‘high’ point in the market
Multiplier has been reduced to ensure no extra
money is raised at national level
Changing the date would mean the multiplier not
reduced so much
Date is just the point to identify relativities
Situation at 1 April 2008
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Economic slowdown – but how much?
B of E base rate 5.25%
Stock Market – FTSE 100 @ 5701
Northern Rock nationalised 18/2/2008
Prospects for Property
 Estates Gazette 26 July 2008 “Incentives up as interest
on the wane”
 Empty Property Rate introduced wef 1 April 2008
 Quote by Bidwells [Data Book no 15] from Dec
2007
 “The slowing economy is likely to hit across all regions
as tightening credit markets make it more difficult to
finance large-scale investment projects. Despite this,
occupational markets have remained healthy, with
rents growing in most sectors.”
Since AVD?
 21 April - B of E and Treasury pledge emergency funding to
banks
 1 May - “worst of credit crisis may be over” (B of E report)
 ‘Melt down’ week:
 14/9/08 - collapse of Lehman Brothers
 17/9/08 - Lloyds comes to rescue of HBOS
 19/9/08 - US officials are working on a plan costing billions
of dollars to help rid US banks of their bad debts
 21 October – the ‘R’ word first used by Mervyn King
 6 November – B of E cuts base rate by 1.5%
 23/1/09 – UK officially enters recession as GDP falls by 1.5%
 Currently base rate at all time low of 0.5%
Can these be reflected?
Conclusion
 Standing at AVD on 1 April 2008 looking
forward in the light of what has happened up
to that point and making reasonable
assumptions as to what might happen in the
future, what rental deal might a willing landlord
and willing tenant have agreed?
 The landlord cannot put off the decision until
another day because of uncertainty – and
neither can the tenant! Cannot wait for market
to settle. The deal is to be done on that day.
 The events of the past year or so, therefore,
have to be disregarded as they took place
after the AVD and indeed were probably
unforeseen as at the AVD – in terms of value.
Impact on property market
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Greater uncertainty
Companies retrenching
Falling demand for property
Oversupply of property
Proliferation of incentives on new lettings
Less transactions
End result:
 Less evidence to have regard to
 Evidence more difficult to analyse and to
convert to the statutory terms
Checking your rateable value
Raising a query
www.voa.gov.uk/valuation - check details,
compare with others, and get in touch
Let us know of any factual errors
If you have evidence to suggest the value is
wrong, share it with us as soon as possible
Professional advice is your choice
Be wary of cold callers
Fact sheet available
Further information
Checking your rateable value
www.voa.gov.uk/valuation
Information on the whole business rates
system and an indication of individual rates
bill
www.businesslink.gov.uk
www.businesslink.gov.uk/estimatemyrates
Central government departments with
responsibility for business rates
www.communities.gov.uk
www.wales.gov.uk
Getting professional advice
Make a choice, not
a mistake
Guidance is
available on how to
chose a professional
ratings advisor
Getting professional advice
If you seek professional advice ensure
they are reputable
Royal Institution of Chartered Surveyors (RICS)
www.rics.org
Institute of Revenues Rating and Valuation
(IRRV) www.irrv.net
The Rating Surveyors’ Association
www.ratingsurveyorsassociation.org
Don’t pay or sign until you are
completely sure
Questions?