According to calculations by Colliers, business rateable value at New Look is now over £110 million, but the main concern has been on the rates bills of individual stores. Because the Government allowed a seven-year gap between the last Revaluation in 2010 and this year’s Revaluation in 2017 (normally the gap is 5 years), some retailers saw some massive increases on particular stores, which they are needing to now finance, particularly those stores in city centres. For example, New Look’s stores in Banbury, Fitzrovia, Leicester and Oxford Street saw rises of 87%, 86%, 79% and 72% respectfully.
Whilst coping with rises in these stores, the situation has been made worse by the fact that those stores in locations in the UK, which should have actually seen relief from the 2017 Rating Revaluation are not yet seeing the impact due to the Government’s policy of phasing in reductions, whereby it takes five years of “transition” until businesses in England are allowed to pay their business rate bills at the new revalued levels. As a result, many retailers with stores which should have benefited from the 2017 Revaluation are still paying much more than expected.
The New Look stores in Stockport and Bolton, for example which should have seen reductions in liability of 54% and 50% found this only translated to a reduction of 3.5% and 3.4% in year one. Unsurprisingly both these stores are being closed.
John Webber, Head of Rating, Colliers International, said, “The government decision to delay the business rates revaluation to 2017 and to introduce the policy of transition continues to impact on UK retailers, either by giving massive rises in some areas and little relief in others. By delaying businesses rates reaching their true levels, retailers with stores in the less attractive areas have been forced to pay for the better ones for far too long. New Look has many internal and market pressures with competition from the internet and a fall in customer footfall into its stores. High costs in running stores such as rents and business rates don’t help.”
Webber added, “I do wonder how many companies need to go down before the Government takes some proper action and considers proper business rates reform. Burying their heads in the sand not only impacts on retailers and the high street, but also ultimately on the man in the street.”