Rates Proposals
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Posts
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Looks like we’re sleepwalking into another short term, badly thought through policy. On Wrexham.Com today there is a break down of 2 new rates proposals that the Council Members are behind
Proposal/Scheme 1: “this scheme will provide a 12 month 50% ‘rate relief for all eligible buildings once the property is occupied again, provided the occupation date in on or after 1 October 2013 and on or before 31 March 2015. The retail properties will have had to have been unoccupied for a continuous period of 12 months or more and have a rateable value of no more than £45,000. It is hoped that this scheme will make it easier for small businesses to start up, along with making a business more viable”
Proposal/Scheme 2: “the second scheme is the ‘New Developments Scheme’ aims to incentivise new and speculative development, and could help boost construction in Wales. The scheme will exempt from business rates all newly built but vacant commercial property, completed on or after 1st October 2013 and before 1st October 2016 for the first 18 months following completion”
Scheme 1 is a scary proposition and is pushing the real problem down the road (yet again). Of course a scheme like this might well attract “new” businesses. It is reminiscent of the approach adopted over several years in the People’s Market. New businesses will come…..and then they will go…..and, meanwhile, other rate paying entrepreneurs will be mightily hacked off.
Unless I am missing something (and I really hope that I am), this will mean that unlet properties will, after a designated time, be given a different rating status to let properties……all in the name of filling a unit. This “interference” with Market forces will lead to inverse consequences….as comparable policies have done in the People’s Market over several years.
Market restraint, unfair practices, uneven playing fields….these are some of the accusations that will rapidly emerge. Established shops will find their competitors on public sector derived lower costs. Some will be driven out because they are already close to the margins. Entrepreneurs will play the system, moving from Shop A to Shop B, incentivised by artificial costs. Investment in genuine fixtures will be reduced because there is a penalty in long termism….and so on
The answer of course, is simple…….though seemingly impossible to deliver. LOWER BUSINESS RATES across the board. This will revitalise town centres and will encourage Entrepreneurs to INVEST in their businesses. You won’t need to spend obscene amounts of money refurbishing an area….the Entrepreneur will do it. I remember “key” money when businesses would actually pay other businesses to take a property off them because it was so attractive. Can you imagine “key” money on Property A when Property B is about to have a Rates relief. Wow!!
While this is Welsh Government at work (?), Alunh sets out the dangers faced very well. WCBC are ‘endorsing’ this …but when are they going to come out with an explanation of how the policy will affect Wrexham, and how they intend to manage this, or go back to Welsh Government with the pitfalls. Business rates do need to be lower to enable businesses to flourish, and improve job prospects all round. This is a boom and bust policy.
Although i agree with alunh that overall rates should be reduced to reflect current market conditions, there is no sign that Government are going to do this, ,so scheme 1 seems pretty reasonable in that it offers 50% reduction to tenants who take occupation of long term empty units for up to 12 months. Yes, i agree that this may see some sporadic occupation, but surely that’s better than no occupation and empty shop units!
My reading of this is that unlet units will still attract a 100% rate and this will only reduce to 50% when occupied so units that continue to be unlet will not have a new rate designation as alun suggests. I can see where alunh is coming from as potentially a near business neighbour could receive 50% when he has to pay 100% simply because he took occupation before the scheme started in october 13 but i guess the scheme had to have a start date and it depends on whether u are an existing or new business.
As for wcbc endorsing the scheme, as it is funded by government, i don’t see that they had a choice as not to do so would probably mean they were in the minority and would draw criticism for not being interested in attracting new business. It would also see potential businesses moving to neighbouring council areas to take advantage of the scheme.
MP’s should be pressurising the Government to go ahead with the rating revaluation which was supposed to happen in 2015 but has been postponed to 2017 as this would make a huge difference to rates payable.
@oldboy744 11221 wrote:
Yes, i agree that this may see some sporadic occupation, but surely that’s better than no occupation and empty shop units!
Not always the case.. Pop-up units selling off a crate of cheap tat confirm people’s prejudices about the town, can put people off from visiting a particular area and most importantly can put off new longer-term businesses that could add something positive..
@Adam 11222 wrote:
Not always the case.. Pop-up units selling off a crate of cheap tat confirm people’s prejudices about the town, can put people off from visiting a particular area and most importantly can put off new longer-term businesses that could add something positive..
Agreed…
There is another interesting side to this. Landlords will actually lower their rents to get a let as things now stand. This will cause the rates to eventually become anomalous because of the relative imbalance. That is precisely what has happened to me
Now I appreciate that this point may contradict the idea that I would like Rates overall to drop but the vital thing here is to create a level playing field long term. Once that occurs, rents will be competitive
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