Property consultants Vail Williams are warning businesses in Reading to prepare for a hike in business rates as the city continues to rise in popularity as a place to locate for business.
Earlier this year Vail Williams reported on the resurgence of Reading as an office destination, making it a key business location within the Thames Valley for occupiers.
But with such success and popularity comes the potential for unintended consequences as Sam Hill, business rates partner at Vail Williams, discusses.
Following the significant rise in market rents over the last 3 years the property consultants predict a potentially damaging knock-on effect for Reading’s businesses when it comes to their business rates at the next Government revaluation.
“Rents achieved on Grade A offices in Reading are now in the mid to late £30s per sq ft. With the imminent speculative development of Station Hill, we expect headline rents to break through the £40 per sq ft threshold in the not too distant future,” commented Hill.
In 2018, the Chancellor announced that the next revaluation will be brought forward by 1 year to 2021, shortening the current rating list to 4 years.
“The significance for occupiers is that the next revaluation of business rates will be based on market rents as of 1st April 2019. So, we predict that occupiers in Reading in 2021 will be faced with a hike in business rates as a result of the city’s increasing success,” Mr. Hill continued.
To safeguard against potentially significant increases in overheads and to ensure these are kept to a minimum, Vail Williams advises businesses to prepare now.
“Of course, you might expect business rates advisers to recommend seeking professional help, but it is for a very valid reason. Business rates are well-known for their complexity, which can make them a minefield for businesses to navigate. Before filling out and returning any requests for information from the Valuation Office Agency (VOA), get expert advice, because this information will be used by the VOA to calculate your new rateable value.”
“Not only this, for those businesses currently negotiating a lease, or with the prospect of doing so over the next 18 months, it is worth speaking to a property adviser because lease events like rent reviews, lease renewals or the renegotiation of existing leases will create market evidence which could be used to justify a new rateable value,” concluded Mr. Hill.
In recent years Reading has ranked #2 in the Demos-PWC Good Growth for Cities Index, has been highlighted as the UK’s third largest digital technology city by Tech Nation and is forecast to be the fastest growing ‘city’ in the UK until 2021.
Clearly, the city is enjoying a fantastic resurgence, bringing with it wider economic benefits as businesses continue to look to the area as a place to locate and do business.
But with such success often come challenges which, Vail Williams warns, businesses should bear in mind as they budget for future liabilities, including business rates.