Office rates update 24th October 2013

Occupiers of Grade A office stock could see rates bills increase by as much as 50% in the 2017 revaluation, according to Lambert Smith Hampton.



LSH said this is one of the possible outcomes of the government’s policy on the rating of empty property since 2008.



It writes: "The policy has acted as a disincentive to speculative development, resulting in a lack of new supply and the postponement of the revaluation. "The downward pressure on rents in large parts of the country mean that after the 2017 revaluation, a Uniform Business Rate (UBR) of up to 60p in the pound may become unavoidable in order for the government to achieve its forecast business rates receipts. "High-performing locations where demand for Grade A office stock outstrips supply are predicted to suffer disproportionate increases in Rateable Value, when compared to locations experiencing more subdued rental increases."



Richard Wackett, national head of rating at LSH, said: “Occupiers of property in emerging hotspots such as Cardiff, Manchester and central London may experience disproportionately high increases in rate liability at the 2017 revaluation. That could be enough to dampen the economy at its most critical moment.” The government’s announcement of an 18 month exemption from rates for new build properties which enter the rating list between 1 October 2013 and 30 September 2016 has been roundly criticised LSH writes as insignificant for the majority of new build developments. Wackett added: “An urgent rethink is required to motivate developers, kick-start development and mitigate some of the skewed effects of a supply/demand cycle which is now out of sync.”