THE RETAIL SECTOR ONE OF THE WINNERS OF REVAL 2023
18 April 2023
The new rates bills for approximately 75,000 commercial properties in Northern Ireland are now landing on the doormats and inboxes of ratepayers.
These bills follow the Land & Property Services (LPS) revaluation of the Net Annual Values (NAVs), an exercise known as Reval2023 and came into effect on 1 April. The NAVs are an estimate by LPS of the amount the property could have been rented for as at 1 October 2021.
Our research shows that although the total NAV of all properties has reduced in comparison to the previous total by approximately 0.6% (£10.2m), only 20.7% of properties are to benefit from a reduction. That means, with increases in all local Council’s district rates, at least 79.3% of ratepayers will ultimately face an increase in their rates liabilities this year.
The big winners are high street retailers who over recent years have borne the impact of a slump in footfall and trading restrictions during the Covid-19 pandemic, the increase in online shopping and increasing business costs which have led to a number of store closures across the province.
In Belfast, the main shopping streets of Donegall Place and Royal Avenue will benefit from over 20% decreases and Castle Street will see a 45% decrease. Generally speaking, the larger the store, the greater the reduction and the newly reopened Primark store in Belfast will benefit from a 30% reduction in NAV, down from £927,000 to £648,500.
Many high streets across the province will benefit from similar reductions. Ferryquay Street, Londonderry will welcome a 29.41% reduction and Hill Street, Newry a 27.27% fall. Holywood appears to be one of the exceptions facing an increase of 16.67%. It is a similar picture in shopping centres, with the Quays, Newry and Oak Centre, Dungannon the big winners benefiting from 37.5% and 43.75% reductions respectively. In Belfast, Victoria Square, Castlecourt and Connswater will enjoy around 30% reductions.
These reductions, along with the correction in rental values following the last few years, will be welcomed by existing occupiers and may be the difference in keeping stores open. Belfast has been buoyed by the recent announcements of new store openings including The Ivory at Cleaver House, Donegall Place; Deichman Shoes and Caffe Nero both at Castle Place. We anticipate that these reductions will encourage other retailers to consider opening stores in locations previously discounted because rates were prohibitively high.
There are, however, also losers and while occupiers of retail property will contribute less, businesses based in warehouses and distribution centres will see large increases of up to 40% reflecting the increased demand partly due to the increase in online shopping. Office occupiers in Belfast will also see a 14% increase.
For many the new rates bills will be welcome news but Reval2023 was based on limited evidence available during the pandemic. There may be cases where occupiers are still paying more than they should and we would recommend occupiers should appoint an experienced rating practitioner to advise on the steps to ensure no more rates than necessary are paid.
This should also include ensuring all reliefs an occupier is entitled to is applied to the bill, including the Small Business Rate Relief which positively has been extended for the 2023/24 rating year. Disappointingly, however, the Back in Business Rates Relief Scheme which gave certain qualifying retailers a 50% discount for the first two years of trading closed for new applications on 31 March. In the absence of a functioning Assembly and Minister’s agreement it seems destined not to be extended.