Reducing the burden of business rates could unlock £1.75bn worth of development over the next five years and almost 4,000 jobs, according to new research.
A report by British Property Federation (BPF), British Council of Shopping Centres (BCSC) and British Council for Offices (BCO) estimates in the past three years alone, rising rates could have led to the economy missing out on as much as £670m worth of new development and up to 6,000 new jobs.
It also argues that during the same period, landlords have been left to absorb three quarters of any increase in rates as occupiers push for lower rents.
The organisastions have called on government to reduce the burden of business rates and introduce more frequent revaluations ahead of the outcome of its review of business rates, which is expected to be reported at the Budget 2016 in March.
“Business rates are often seen as a cost for occupiers; one that gets in the way of growing their businesses,” said Ion Fletcher, director of policy (finance) at the British Property Federation. “This research shows that business rates also harm landlords and in particular they discourage new, economically-valuable development.
“The government’s desire to maintain a high level of income from business rates, although understandable, means we are missing out on opportunities to provide new jobs, skills and growth in various sectors of the economy, not least construction and retail.”
Meanwhile, Ed Cooke, director of policy at the British Council of Shopping Centres, said: “We have heard numerous times from the Chancellor that this government are ‘the builders’. This research by independent expert economists shows clearly that business rates inhibit beneficial property investment and development, and therefore are a barrier to much needed growth and productivity.
“If government really takes seriously the challenge of redeveloping our town and city centres so they are places people are proud to be associated with, then they need to significantly reduce the current tax burden”
Dr Stephen Rosevear, director at Regeneris Consulting, added: “The study has important messages for policy makers, investors and occupiers alike, not least of which is the very real impact rising business rates could have on employment and development.”