Business rates are a tax on commercial property and are used to fund local services. It is based on the annual rental value of a specified date, this is known as the rateable value. It is then calculated by multiplying the ‘rateable value’ by the ‘rates multiplier’ which is set by the government.
Due to this method many business are finding rates to be extremely high, ranging from £15 – £34 psft. In Mayfair, they are often in the high £30’s which adds a significant cost to the business renting the office space.
The British Property Foundation has called for business rates to be frozen for a year and relook at the way the rateable value is measured. The rateable valuation has been measured currently once every 5 years, meaning the last valuation was pre-recession and therefore creating higher business rates than if measured in the current market.
Teresa Beatty a surveyor for Morgan Pryce has stated “Business rates are pricing businesses out of their current offices.”
It has been discussed to cut properties worth £120,000 or less out of the tax, as they only make up 10% of the income made from this tax.
This article was brought to you by Morgan Pryce, a specialist tenant acquisition agent with offices in Oxford Circus and the City. Morgan Pryce specialises in search, negotiation and project management and works exclusively for tenants.
