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WHICH GARDEN CENTRES WILL BE HIT HARDEST?
RATI AT TING REV
The retail industr y is poised for April 1, when the Business Rates Revalua tion comes into force, meaning changes to business ra tes across the country . Property consultant Gilbert Evans partner Allen Evans explains wha t this will mean for the garden centre sector.
T Wa Wa
he impact of the rates revaluation on garden centres varies dramatically with new liabilities rangin g fr om 17%
amatically y,,
r eductions, to astounding increases of over 50%.
Business rates liabilities on ‘non-domestic’ property are based on rateable value, multiplied by a ‘multiplier’ (Uniform Business Rate – UBR) to determine an annual y. . Rateable value is an
rates liability. Rateable va
assessment of the annual equivalent rental value of a property.y.. The rates revaluation will apply to England, Wales, and Scotland only.y.. Northern Ireland’s revaluation took place in 2015. The UBR for England is £0.479 (large properties), and for Wales is expected to be £0.499 (large properties). The Scottish Parliament has not yet released its anticipated UBR.
ales is expected to b
Ther e will be a transitional r elief scheme in England, for ‘smaller ’ Wales and, as yet,
properties in Wa ales and
Scotland r emains undecided. Some ratepayers in England could see actual liabilities increase by a staggering 43% (plus RPI) in the first year and an additional 32% in the second year . Reductions, however will be capped at 4.1% in the first year , then 4.6% in the second.r,, then 4.6% in the seco
however r,,
Ther e will also be a new appeals pr ocess in England, called ‘Check, Challenge, Appeal’,
intended
to reduce the volume of appeals by agr eeing the facts underlying valuations at an early stage. Ratepayers wishing to lodge an appeal before theValuation Trn Tribunal will incur a £300 fee, only refundable if the appeal is successful.
Va 6 DIY WEEK 24 FEBRUARY 2017 An inconsistent approach
Most garden centr es have seen increases in their rateable values since the 2010 rates r evaluation. Average increases are approximately 11%. Most striking is the extreme range of movement, from reductions of 17%, to increases of over 50%. This demonstrates a very inconsistent offices of the
Av
Valuation Office Agency (VOA). This erratic appr oach and dismissal of previously-agreed individual assessments will,
appr oach by the local ff Va
some of these potentially eightfold. Pr eviouslyly,
y, installations generating l, undoubtedly y,,
generate a significant number of appeals from businesses.
Garden centres range from single site operations of less than £500,000 pa turnover, to supercentr es with £15million-plus turnovers. Some have modern purpose-built structur es; others dilapidated glasshouses. Values will be wide- ranging. The valuation basis for rating is a r entals basis, where floor ar eas ar e categorised and valued accordingly
r,, Va alu y.. This is for a sector s al values. However Va r,,
where turnover – actual or potential – is the key value driver . The VOA accepts that turnover has a place in establishing r ental values. However again
r,, the
varies. If the level of assessment pr oposed by the V
is not sustainable, wher e there is evidence of an actual
we believe turnover should carry gr eater weight as it reflects r eality
Solar roof panels no longer exempt
Many garden centr es that have installed solar roof panels and are curr ently assessed could see their r esultant rates liability fr om April 1,
2017 incr ease dramatically –
degree of acceptance e Valuation Of fice turnover y..
r,,
under 50kw escaped assessment. Now they will be included. Though still valued fr om an envir onmental perspective, the additional rates liability will r educe potential energy bill savings.
Concessions adding further complexity Garden
as a single entity ngle entity w, y, Following
centr es ar e often valued , despite often
being occupied by a number of concessions. case law
r ecent w, the VOA is intending
to review these with the aim of arriving at separate assessment s. Garden centr e operators may not consider this bad news, as there will be opportunities to argue for reductions on the overall garden centre assessment. However
ssessment. However r,, they
should review licence and lease documentation to determine how concessions’ rates liability is to be tr eated if separately assessed. If the concession operator is faced with higher overall occupational costs, this might impact on the level of r ent e will
the concession will pay be practical issues for the V
ession will pay. Thery. Va
cal issues for the Valuation
Office as concessions often relocate within gar den centres, with many concession agreements temporary
and on flexible Va terms. Ke epin g
tabs on a regularly changing entity will mean mor e time and ef fort for gar den centre operators, their rating fice and
advisors, the Valuation Office local authorities.
ff Are nurseries at risk?
The VOA is reviewing ‘gr owing nurseries’ to consider if they should be assessed for rating purposes. This follows a 2015 Court of Appeal decision relating to a mushr oom compost business, which was found not to be exempt fr om rating, as the operation was not deemed to be agricultural, nor did the buildings qualify as a ‘market gar den’. Despite various press articles, it is anticipated that the consequences of the VOA r eview ar e likely to be limited to young plant pr oducers who gr ow cr ops only in buildings and do not bring them on to their final maturity. Liner, pr,, plug, and young plant producers are anticipated to be at greatest risk of rates assessment.
The more complex appe als procedure and the specialist nature of garden centr e property and rating mean that taking specialist advice fr om a suitably qualified charter ed surveyor and sector expert is as important as ever .
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