By Declan Flynn, Managing Director, Lisney
Northern Ireland Finance Minister, Sammy Wilson, has launched a consultation on increasing the amount of rate relief for small businesses, funded through a levy on the largest retail premises.
The Minister’s preferred approach for the large retail levy would involve an average levy on rate bills of around 20%. This would be applied to large retail premises with a rateable value of £500,000 or more. It would take the form of a regional rate supplement. In terms of the small business rate relief scheme, the Minister’s preferred approach would be for 20% relief to be provided to eligible premises with an NAV of £5,001 - £10,000. This would double the amount of relief provided under the main scheme. No additional relief would be provided to those currently receiving small business rate relief (NAV of £5,000 or below).
The consultation will end on Tuesday 18 October 2011. Following the consultation, the Northern Ireland Executive and Assembly will be asked to approve any legislation so that the final measures would be in place from 1 April 2012 for a three year period through to 31 March 2015.
Other proposed changes to the non-domestic rating system include to allow the non-commercial use of window displays in empty shops, so that the full occupied rate is not charged on otherwise empty properties. This would also apply for three years.
Commenting on the proposals, Lisney Managing Director, Declan Flynn, says: “The proposal to introduced a supplementary business levy for large retail premises is not the correct approach. There seems to be no sense in making it more expensive for large retailers - who are anchor tenants in towns, cities and shopping centre, and major employers - to locate in Northern Ireland. The only likely outcome is to discourage new entrants to Northern Ireland at a time when we need them most, and to make large retailers already trading here to reconsider their position.”
“This proposal may represent a rebalancing of the rating system but does it address the interests of the wider economy and the changes in the property market?. Rents have fallen, in many cases by over 50%, so what we really need to see is a more fundamental rethink of the rating and rate poundage system that gives consideration to changes in rents across the board. To end up in a position where the single biggest cost to many retailers is their Rates bill is I think unsustainable. There is a significant over-supply of retail space in Northern Ireland particularly in secondary and tertiary locations, and this will remain an issue for the foreseeable future. Many landlords are receiving little or no rent at present but the rates bills still keep coming
“One aspect of the proposals that is welcome however is the non-commercial use of window displays to avoid occupational rates being paid on otherwise vacant buildings. In many cases, when a landlord loses a tenant, they have a double whammy of costs - they obviously lose the rent, and then, in many cases, they have to pick up the tab for the service charge and pay vacant rates. This puts many landlords in a very difficult position in a market where new occupiers for their properties are few and far between.”
The consultation paper, along with the initial impact assessments, is available at http://www.dfpni.gov.uk/rating-review.
Written responses can be sent to:
Rating Policy Division
Department of Finance and Personnel
3rd Floor
Longbridge House
20 – 24 Waring Street
Belfast
BT1 2EB
E-mail responses can be sent to: ratingpolicy.cfg@dfpni.gov.uk