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Business rates shock for London and the southeast

Retailers in London and the southeast are set to be the biggest losers from the 2017 business rates revaluation, according to new research.

Property values have dramatically changed in different parts of the country since the last revaluation in 2010, which was based on 2008 rents, said global commercial real estate agency Colliers International.

Its research suggests retailers in 324 high streets and shopping centres across the UK are likely to see a decrease in business rates, while 21 will experience no changes.

But 76 retail centres - predominantly in London and the southeast - will see their business rates increase in 2017.

Colliers estimated that Dover Street in central London will see rates increase by 415%, while Spitalfields will see an increase of 128%, Brixton by 128% and Westfield London shopping centre by 102%.

Business rates are typically revalued every five years, but the government postponed this year’s revaluation in England, Wales and Scotland to 2017, which will be based on a property’s rental value on April 1 2015.

The government will have assessed three-quarters of properties for new business rates levels by January 2016, but retailers will only be informed of the findings in October next year.

John Webber, head of rating at Colliers, said: “The 2017 rating revaluation will produce the largest changes to business rates for high street retailers in a generation. The bulk of assessments have been made and local councils are very nervous about widespread reductions in business rates revenue.

“Retailers could be sleep walking into rates changes that threaten the sustainability of their stores. We strongly urge them to wake up and act to protect their shops and the jobs which rely upon them.”

Nick Marks, director of retail at property agent James Andrew International, agreed: “The increases are going to have a massive impact on the retail property market, especially with some of the big spaces in London’s West End. It’s scaring off new international retailers already.”

Debra McCann, co-owner of Spitalfields-based indie The Mercantile, said: “I don’t see how any business like us can survive an increase like that alongside the kind of rent hikes we’re having because the whole area is being regenerated.

“It just drives out the small independent businesses, which are the lifeblood of the area.”

However, Jerry Schurder, head of business rates at chartered surveyor and property consultancy Gerald Eve, pointed out the upsides: “Although there are some nasty hotspots particularly in London, this time retail won’t be the hardest hit. Large swathes of the country will see some pretty big reductions.

“If you take a typical high street operator which has stores around the country in the main towns, they will likely be better off with the revaluation, particularly if they are not heavily exposed in London.”

Colliers’ research suggests that Newport in South Wales will be the biggest winner, with more than a 80% cut to its business rates bill, while Port Talbort is expected to have a 64% cut and Tamworth will fall by 56%.

Tim Attridge, head of retail ratings for property advisor CBRE, said: “There are drastically different stories to tell, even within London, individual towns or streets.

“The other thing to consider is what the government does about transitional relief, which hasn’t been confirmed yet. Previously it has phased in increases but also phased in decreases, which means you don’t immediately get the benefit of a fall.”

The government’s ongoing review of the business rates system in England is due to report by the 2016 budget in March. However, the outcome is expected to be fiscally neutral, meaning the total sum collected from businesses will not change.

Source: Colliers International
Top 20 retail centres with largest increases and decreases (sorted by percentage):
INCREASES      
Area Current Average RV % Change 2017 Prediction Average RV
Dover Street £76,394.00 414.84% £393,305.54
Redchurch Street £13,527.00 361.35% £62,406.62
Lowestoft £3,634.00 330.59% £15,647.71
Leicester Square £162,250.00 238.89% £549,852.03
Dunstable £37,556.00 222.94% £121,284.85
Kingston Upon Thames £141,312.00 222.94% £456,358.63
Streatham £11,736.00 210.98% £36,496.98
Fulham Broadway £66,954.00 187.06% £192,199.05
Coventry Street £105,000.00 185.94% £300,237.00
Bishopsgate £116,265.00 180.82% £326,496.38
Spitalfields £23,093.00 169.12% £62,147.88
Old Bond Street £696,681.00 169.12% £1,874,907.91
Marylebone High Street £92,934.00 146.05% £228,666.50
Jermyn Street £98,202.00 133.24% £229,043.73
Brixton £31,234.00 127.72% £71,125.10
Nottingham £174,788.00 118.27% £381,514.04
Felixstowe £7,665.00 115.30% £16,502.44
South Molton Street £125,129.00 104.16% £255,463.37
Westfield London £257,084.00 101.84% £518,898.35
       
DECREASES      
Area Current Average RV % Change 2017 Prediction Average RV
Llandudno £46,784.00 -40.20% £27,976.00
Keighley £27,626.00 -40.20% £16,520.00
Rochdale £32,830.00 -40.20% £19,632.00
Bridgend £45,731.00 -40.20% £27,347.00
South Shields £63,282.00 -41.28% £37,159.00
Dover £44,788.00 -41.28% £26,299.00
Scunthorpe £25,922.00 -41.28% £15,221.00
Stockton-on-Tees £43,607.00 -42.04% £25,274.00
Kidderminster £45,833.00 -42.04% £26,564.00
Bromsgrove £38,034.00 -42.04% £22,044.00
Llanelli £39,363.00 -42.12% £22,783.00
Dewsbury £68,710.00 -42.59% £39,446.00
Pontypridd £33,797.00 -43.84% £18,980.00
Torquay £42,385.00 -44.80% £23,396.00
Ealing £143,538.00 -46.18% £77,252.00
Weymouth £224,750.00 -50.66% £110,891.00
Neath £56,706.00 -55.67% £25,137.00
Tamworth £73,010.00 -55.84% £32,241.00
Port Talbot £35,521.00 -63.51% £12,961.00
Newport £33,314.00 -71.29% £9,564.00

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