The business rates revaluation could see retailers in London faced with a increase of 435% in their rates bill according to new research done by Savills.

On April 1st the revaluation is due to come in to force and retailers based in central London could be facing an increase, rental movement between 2008 and 2015 in London's main shopping streets has increased valuations compared to the last valuation cycle in 2010.

Currently the figures ate not taking any potential rates relief cap in to account, infact they mainly highlight challenges facing retailers and business in London who will face rates increases.

According to Savills’ data, retailers in Mayfair look set to swallow the biggest rate hike, where businesses on Dover Street could see a rise of 435% if no transitional rate relief is applied, although that figure drops to 50% when taking into account rate relief.

For example Conduit Street in Mayfair is expected to see a rise of 195% which is a 33% relief. Mount Street could be facing an 180% increase which is 32% with relief.

Head of rating at Savills, David Parker has said that "While business rates rises are likely to be introduced gradually, the timing is yet to be decided" this however leaves businesses sort of in the lurch."

He went on to say:

“Although any rise in business rates is very likely to be phased in incrementally, the mechanics and timing of the phasing are yet to be formally announced, and hence we don’t know what the cap on any increase will actually be. This leaves many retailers in limbo as to how much exactly they can expect to pay. The topline, however, is that in most locations in Central London rates bills are set to soar, with phasing cushioning the initial impact, but not for long."

The Valuation Office Agency is due to publish their draft findings on 30th September where retailers will be able to get an idea of the rate rises that they will be faced with.

Savills has warned that areas like Covent Garden and Oxford Street could see rates increases improve faster than value gains.

Anthony Selwyn, Head of Central London retail at Savills commented on the slow rental growth in the retail sector. He said "As London has grown as a visitor destination, tremendous value has been unlocked in recent years so we don’t expect retail rents to rise as quickly over the next five years as they did in the previous five.

"The prospect of significant business rates increases on the horizon will create a cost challenge to some retailers and landlords may find themselves having to allow for a little more flexibility on deals to capture quality tenants."

Selwyn went on to say that rates rises may be immersed by the record amount of tourists that are visiting London which has been increased by the pound being weakened, however Selwyn says that landlords and tenants in the capital shouldn't be un-nerved.

“Fundamentally, if Central London continues to attract high volumes of tourist spend, the rates change in part will be absorbed. However, it would be wrong for landlords and tenants to not be acutely aware of the changes and look at ways of best protecting their positions".

Author: Lauren Angell, Event Manager, CPT Events

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