Business Rates - The Revaluation

It sounds like a very expensive Marvel sequel but this is not that, it’s nowhere near as exciting.

In April 2023, the next Business Rates Revaluation comes into force. Fundamentally, it has been designed to reflect the changes to the commercial property rental market between April 2015 and April 2021 when we were in the midst of the worst health crisis the UK – possibly the world – has ever seen.

The revaluation has been calculated so that sectors such as industrial which has seen huge growth pay a far greater percentage than sectors such as retail and hospitality. These sectors in particular have suffered unprecedented and in some cases unsustainable losses during the two years of the pandemic.

The revaluation will dramatically alter the amount of business rates payable in London and it must be noted that they are largely based on the property rental values that were in place at the heart of the pandemic in April 2021 when the market was moving at lightning speed. These rates will redistribute the tax base to more reflect the variations in rental valuations.

The tables below estimates the percentage increase or decrease in business rates over the next two years in each of the London submarkets -

The standout facts are that the biggest increase (over 35%) is in Clerkenwell and Farringdon, the biggest decrease (over 11%) is in Victoria and taking all of the submarkets into consideration, the average increase is around 12%.

In terms of industrial property, estimates suggest that London and the South East represent  by far and away the biggest increases, (from £4.45 to £7.25, an increase of almost 63% and from £3.33 to £5.45, an increase of well over 63%) respectively.

Why Are Business Rates Fluctuating So Much?

Despite the Covid-19 pandemic, commercial property rents have gone up over the last half-decade and the average increase is largely driven by the fact that London remains a global financial centre.

Prime rental valuations in St James and around Berkeley Square have seen increases however due to a large increase in supply, rents in the core market have fallen slightly. While the City Core submarket has seen modest increases, the reason why Shoreditch, Clerkenwell and Farringdon will see such dramatic rises in business rates is because of the continued and sustained rise of the tech, media and telecoms sector in and around Silicon Roundabout.

For more information on business rates as well as all your central London property requirements, please contact us on 020 7629 1088 or email info@bdgsp.co.uk.