Following a strong ministerial hint that the Government intends to revalue properties more frequently, rating adviser Altus Group has defended the current five-year revaluation cycle and advised against a shorter revaluation cycle that would reduce the appetite for scrutiny and appeal.
In a Parliamentary written answer on Friday 15 September, Financial Secretary to the Treasury and Paymaster General, Mel Stride, said that, as a next step in its review of business rates, “the Government aims to revalue properties more frequently.”
Altus Group executive vice president, Robert Hayton, says, “The benefits of shorter valuation periods fail to outweigh the costs.”
“The Government acknowledges that more frequent revaluations will cost more to compile and administer. We see no satisfactory way of reducing those costs that doesn’t pass a burden to the ratepayer. A formula approach is obviously going to be unfair to some ratepayers. An apparently more popular option, self assessment, is fraught with difficulties and essentially shifts the costs of setting value onto the ratepayers themselves.”
“With reform intended to be revenue neutral and the VOA already having to find efficiencies to cope with a 29% budget cut, it doesn’t take a genius to see that the average ratepayer will be worse off if a more costly revaluation cycle is introduced.”
“There is nothing fundamentally wrong with a five year revaluation cycle, provided it is always five years,” he adds. “It allows a business to plan properly over the short term. It fits in nicely with a normal rent review period or lease length, it follows the ordinarily gradual evolution of values and allows for periodic redistribution of liability. It means overpayments recovered on appeal are meaningful, with the cost and effort of challenge balanced by a lasting result.”
Altus Group, the international rating adviser with experience of property taxation systems across the globe, has set out an alternative agenda for reform. Parliament should require sharing of evidence with ratepayers by the Valuation Office Agency and use UK business rates to encourage investment in plant and machinery, including renewable energy infrastructure. It should not use business rates as a blunt tool for levelling the playing field between online retail and the high street or supporting struggling small businesses at the expense of major employers.