The amount of money that high street shops pay in the UK is set to change as new business rate regulations are brought in.
Colliers International, the property consultant, have conducted research that suggests that 76 towns and shopping centres in the UK will soon have to pay more towards their business rates.
It goes on to say that some areas in London will see a rise of over 400%. It also notes that areas in the Midlands and the North of England will benefit the most; the cost of business rates in these areas will fall significantly.
The report also stated that the Welsh town of Newport may see their rates drop by up to 80%.
A ratings expert from Colliers International, John Webber, said:
“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.”
Business rates are typically reassessed once in every five years, and they are based on the value of property. The previous revaluation in England and Wales was all the way back in 2010. However, the next revaluation has been controversially delayed until 2017.
The revised rates will be devised by the Government’s Valuation Office Agency and have not been announced yet. However, Colliers have used rental data from between 2010 and 2015 to predict the changes on the way.
It reports a large degree of difference in various parts of the country.
It says that Guildford will see in increase if 42%, Marlow a rise of 58% and Brighton will go up by 18.5%.
However, places such as Rochester in Greater Manchester and Kidderminster in the Midlands, which were badly affected by the credit crunch, will see rates fall by 30% and 42% respectively.
Dover Street, in London, will face the biggest rates rise; it is predicted that shops here will be paying around 415% more than they are at present. Brixton will see an increase of 128%, but Ealing will fall by 46%.
Mr Webber believes that retailers need to ready for these changes, that will come in to force in 2018.
“Business rates is a major cost for retailers and it’s really important that they are able to budget for these once-a-generation changes.”
A review of the current set up has been promised by the government. They will deliver the results of their research in the Budget next year.
This year, it is predicted that business rates will generate roughly £28bn worth of revenue for the Treasury this year; this is more than the total raised by council tax.
It is currently understood that retailers account for around 25% of the total money made from business rates, which is higher than any other industry. As a result, many retailers are now calling for big changes to be made to a system that they claim is unsustainable.
They believe that it is a system that will inevitably create big winners and losers for individual businesses.