Rates
Updated business rates or tax liability for office occupiers.
Transition
Transitional capping relief is intended to ensure that no ratepayer’s liability following a revaluation differs by more than given percentage limits, compared with liability before the revaluation. The current 2010 List arrangements are complex and there are different capping levels depending on whether the property is ‘large’ or ‘small’, whether the phasing is going upwards or downwards.
The transitional arrangements for the current Rating List allow for increases of 20% this year, 20% in 2012/13 and 25% in the two subsequent years, in each case plus inflation. Most of central London will come out of transition by 2013/14 if not before. However, pockets of Kensington for example will remain in transition for the whole cycle.
These increases ignore the new Crossrail Levy which apply to all properties with a rateable value in excess of £55,000 and is applied at 2p in the pound for the foreseeable future.
Small Business Relief
Only businesses that qualify for Small Business Rates Relief (SBRR) have the small UBR used in their liability calculations. All other properties are assessed using the large UBR. A business can apply for SBRR if the aggregate of the Rateable Values (RVs) of its properties is below £18,000 (£25,500 in London) and only one property is assessed at RV £2,600 or above. The City of London Corporation imposes a 0.4p UBR surcharge.
Why appeal?
The regulations that accompanied the 2005 revaluation and are still in place mean that there are no longer restrictions on backdating agreements to the beginning of a rating year.
Apart from appeals on the question of the valuation basis of a property, rate liability can be reduced following successful appeals where, for example an occupier suffers disturbance either within or adjacent to his building from demolitions, roadworks, etc and if part of a property is vacated, even for a short time, savings in liability may be possible provided the correct advice is obtained at the appropriate time.
In summary, appeals should be made to ensure the minimum level of liability. As with any tax, you should consult a professional advisor, in this case a qualified surveyor, to ensure you are paying the correct amount and to agree whether an appeal is appropriate in any case.
If you require any further information concerning the revaluation you may wish to check out the Valuation Office web-site
www.voa.gov.uk. Alternatively, contact me at
shile@geraldeve.com.
Looking ahead
Many office occupiers in Central London have experienced significant increases since April 2010 when the current Revaluation came into effect, based on April 2008 rental values. The challenge will be to show that the rental evidence the Valuation Office has used does not reflect the net level of deals around the valuation date.
Rates liability is often one of the biggest costs of running a business. Not all ratepayers may be aware, however, that they have a legal right to appeal against their rating assessment and if an appeal is successful, rates savings will often follow.
When rates are paid
Business rates are taxes levied on commercial properties by billing authorities on behalf of central government, which redistributes the total fund back to authorities throughout the country according to need.
Rates demands are issued by billing authorities to ratepayers at the beginning of each rating year on 1 April. Ratepayers have the opportunity of paying their liability in ten consecutive monthly instalments; usually a more popular method than a single annual payment.
Empty Rates
Where offices are unoccupied, a liability to empty rates falls on the person who has the right to possession, i.e. normally the owner for newly constructed buildings, or the tenant once the premises have been let.
Offices unoccupied for a period not exceeding three months have full exemption from rates. Following that period, empty rates are now due at 100% of the occupied charge while the property remains vacant. Billing authorities have discretionary powers to reduce liability where a property is partially vacant for a short time and there are also various exemptions to empty rates, perhaps the most important being that empty rates are not payable on buildings that have listed building status. Charities automatically receive 80% relief and this can be topped up to 100% at the discretion of the Billing Authority.
Buildings with a rateable value less than £2,600 are exempt from empty rates.
There are, however, ways of mitigating your liability but this is where you should seek professional advice from a qualified surveyor as this is an increasingly complex area of rating practise.
The liability
Apart from any reliefs that may be appropriate, rates liability is calculated by multiplying the rateable value of the property by the uniform business rate (UBR) for the appropriate year and applying the resulting product to the period for which the ratepayer is liable. The principal exception to this simple calculation is the effect of the transitional capping arrangements, noted below.
The rateable value for a property is the value assessed by the Valuation Officer (an agency of the Inland Revenue) whose duty is to compile rating lists for each area and to ensure that these lists are kept up to date. Subject to certain assumptions, the rateable value is intended to represent rental value as at a given date, known as the antecedent valuation date (AVD). To ensure that this tax base remains reasonably current, national revaluations are carried out at five year periods. The AVD is a date two years before the beginning of a rating list so the current 2010 rateable values are based on valuations as at 1 April 2008.
The other part of the liability equation is the UBR and this is a nationally set rate that increases with inflation each year except at a time of Revaluation. The UBR in England for 2011/12 is 43.3p (43.7p in the City of London).
The London Office Guide is useful to help tenants find London office space to rent, London offices to let, central London offices to rent and both serviced offices and commercial property space. In addition to helping find London offices to rent and central London office space to let, it is useful for finding London serviced office space and business centres, London agent surveyors and information on the London office markets. Finding office space to let in London can be daunting. The right office space to rent in London is critical for many companies and if they don't find the right London office space to let their business and staff may be affected. Office space in London and London office property to rent can be expensive so companies need to shop around as much as possible. Overall, the London Office Guide is the most useful website and publication to help tenants find London office properties to let and central London commercial space. Especially office space in central London which includes City office space, Midtown offices and West End office space.
Included in the City of London are the postcodes EC1, EC2, EC3, and EC4. On the City fringe are London E1, London N1, London SE1, the southeastern part of London E2 and the southern part of London N7. London E14 includes office space to let in Canary Wharf and offices to rent in London Docklands. It is a separate office market but it competes for many of the same type of tenants the City does. Office space to let in London EC1 includes the areas of Clerkenwell, Smithfield and Farringdon which are east of Farringdon Road. Many media and hi-tech companies find these areas appealing. Offices to let in London EC2 include the areas around the Bank of England and Stock Exchange. Banks and financial companies of course prefer London office space in this postcode. Offices to rent in London EC3 include the area around Fenchurch Street and Eastcheap. Traditional home of insurance companies. Office space to let in London EC4 east of New Bridge Street include the areas around St. Paul's, Cannon Street and Blackfriars stations. London office space to rent is less expensive in the fringe postcodes. However, there is high quality London office space to let in London E1 around Spitalfields, Shoreditch and St. Katharine's. There is also new high quality offices to rent in London SE1 along the southbank and new office space to let in London N1 around King's Cross. There is also a range of inexpensive offices to rent around Angel and Old Street in London N1. Offices to let in London Docklands are mostly modern and the Canary Wharf office space to let is some of the best in all of Europe.
London Midtown is the area between the City and the West End. It is all of London WC1 and London WC2. It also contains London EC1 west of Farringdon Road and London EC4 west of New Bridge Street. Office space to let in London WC1 include offices to rent around Holborn and office space to let in Bloomsbury and also king's Cross. Offices to rent in London WC2 include Covent Garden office space to let and offices to rent around Leicester Square and the Strand. The Midtown office market is divided by Kingsway. Midtown office space to let east of Kingsway competes more with the City. Midtown offices to rent west of Kingsway tend to compete with the West End. Covent Garden offices to rent compete mostly with Soho office space while Bloomsbury offices for rent compete with office space in the West End north of Oxford Street.
The central or core West End of London office market comprises mainly London W1 office space to let. It also contains St James's offices to rent which is London SW1. London W1 offices to rent are in three geographical parts of the postcode. Mayfair, Soho and north of Oxford Street. Mayfair is the south west part of the London W1. Mayfair office space to let is some of the most expensive in the world. Soho is the south east part of London W1. Soho offices to rent have traditionally appealed to advertising and media companies. London W1 north of Oxford Street is divided into several office markets. There is office space to let in Noho which is immediately north of Soho. Soho office space to let is more expensive though. North of Noho are offices to rent in Fitzrovia which is the north east part of London W1. London W1 west of Portland Place is the remaining office market north of Oxford Street. It comprises mostly period office properties converted from residential.
The Greater West End of London includes offices to let in all of London NW1 and part of London NW8 to the north. To the south it includes almost all of London SW1, part of London SW8 and part of London SE11. To the south west all of London SW5, London SW6, London SW7, London SW10 and parts of London SW11, London SW15 and London SW18. To the west all of London W2, London W6, London W8, London W9, London W10, London W11, London W12 and London W14. Office space to let in London NW1 and London NW8 are offices to rent in Camden, Euston and Marylebone. Office space to let in London SW1 includes offices to rent in London Victoria, Belgravia, Millbank, Westminster, and Whitehall. In London SW8 and London SE11 are offices to let in Battersea and office space to rent in Vauxhall. In the south west there is office space to let in Chelsea, Fulham, Earls Court, Knightsbridge, South Kensington, Putney and Wandsworth. The office space to let in London SW11 also includes parts of Battersea. The Knightsbridge office space to let is expensive. Knightsbridge offices to rent compete with Mayfair. To the west there is office space to let in Paddington, Hammersmith, Bayswater, Kensington and West Kensington. There is Hammersmith office space to let in London W6 and Hammersmith offices to rent in London W12. London W14 office space to rent comprises mostly West Kensington.
In some cases serviced offices in central London or business centres in London might be more appropriate for some companies. London serviced office space is ideal for smaller companies. Serviced offices in London are usually available month to month and include furniture and services as well as the space. There is a range of London serviced office space available. From expensive prestige buildings to basic economical space. Before trying to find office space in London and especially central London office property to rent, tenants should refer to the London Office Guide.
