Deals agreed now could have an additional impact on their future business rates, they have been warned.
Craig Wallace, senior surveyor in the rating team at the Bristol office of national property consultancy Lambert Smith Hampton (LSH), said that any agreements made during the coming months are likely to be used as key evidence in setting the level of rating assessments for the next Rating List, which will come into force in 2017.
“The Valuation Office Agency will be setting 2017 Rating List Rateable Values on a figure which reflects the rental value of the property on 1 April 2015. They will therefore be particularly looking for rental deals around this date to set their values.
“We are therefore urging all occupiers who are considering taking on new leases or renewed leases, or are negotiating rent reviews, to look very carefully at whether this reflects a reasonable market level.”
Particularly where an occupier has acted for themselves to negotiate their rental costs with their landlord, there is a possibility of more onerous rental levels and terms being agreed and, at this time, the result may not only be an increased rent, but also a larger rates bill in two years’ time.
“It’s critical, therefore, that those businesses are mindful of possible future rates when they start negotiations with their landlords. It should be kept in mind that every pound saved in a rental negotiation has the potential to save the organisation more in terms of their total property costs.”
Also important for occupiers to know is that following the Government’s Autumn Statement late in 2014, ratepayers will need to challenge their rating assessment prior to 31 March 2015 in order to claim backdated refunds.