The furore over business rates is gathering speed. Today government ministers claimed the “revolt” over business rate revaluations was rooted in “distortions and half-truths”. Sajid Javid called it a relentless campaign of misinformation.
Really? Well here is just one example.
We look after many properties for investors and that naturally means that we have to build a strong relationship with the tenant. On one particular property in an affluent area of London, the rateable value has increased from £80,000-£168,000. As you might imagine the tenant is less than pleased.
The landlord feels exactly the same way. There is a five yearly rent review due later this year. Where we had been expecting a significant increase in the rent, any increase is now going to be tempered by the 100% rise in the rates liability.
Also, this type of rate increase is bound to affect the tenants operating liability, increasing the risk of tenant default and having an adverse effect on investment value.
Therefore this massive increase in tax impacts both the tenant and the landlord.
If you have read our posts before you will know that we always look to secure investment properties for clients with real potential for both rental and capital growth. It looks like affluent areas of the south-east may be off our radar if this hike is typical.
As for the distortions, half-truths and misinformation referred to by the government, they should know that figures quoted here are freely available on the government’s own website. It’s just that you don’t know the address – we don’t want to encourage the tenant do we?
PS. Excellent article by David Smith in the Times on Business Rates on Wednesday 22nd February – Click here to view