Consulting » INSIGHT – Property ratings lack appeal.

Property ratings advisors are stepping up their campaign to encourage companies to appeal against commercial property rateable values, due to be set at the beginning of next year. Many companies will already have received and filled in the blue forms with which the Inland Revenue will calculate rateable values on their properties. But with rates set in line with rents – which many businesspeople consider an anomaly in any case – at a time when commercial property valuations are at a decade-long high, companies face huge increases in their business rates. “Rateable value is based on the open market rental value,” says Andrew Smith, MD of property adviser LSM Partners. “But it has been difficult for anybody to interpret the property market now, since there has been a distinctly patchy recovery in terms of values. And looking at some leases will not tell anyone what the market was doing in 1998, the base date for new rateable values.” Businesses are able to appeal against the valuation set by the Revenue, and according to Bob Dickman, head of the rating division at construction services group Fletcher King, half of commercial property rates would be reduced on such an appeal. Currently, only 40% of ratings assessments on commercial property in England and Wales are appealed, leaving an estimated £3bn in excess payments by companies each year. “For every 100 appeals we make on behalf of our clients, 80 are successful,” says Dickman. He claims an average saving in rates of 17% for appellants, and also stresses that other reductions are available for companies willing to make the effort. “Noise, dust, reduced light and restricted access are just some of the disturbances that, if present over a protracted period of time, can be grounds for reduction in rates,” he explains. But the appeals process can be a lengthy affair. “Revaluation appeals will not even begin until April 2000, and from that date businesses will have to pay the set rate until their appeal is heard,” says Smith. “Delays of two to three years are not at all uncommon.”