Retailers and businesses across Tunbridge Wells are set to be hit by a massive hike in rates during the coming year in what has been described as the ‘biggest change’ to the tax ‘in a generation’.
According to research by the commercial property agency Colliers International, high street shops and other traders in the town can expect to see an increase in rates for 2017 of 17.4 per cent.
In some cases this will add more than £10,000 a year to the cost of running a business at a time when many traders are already struggling.
In the first rate review since 2010 the Government, which sets the rates, is expected to notify retailers of the changes next October.
Colliers has made the forecast using data which will be processed by the Government Valuation Office Agency (VOA) to set the rates.
The rate hike will come as a blow to local companies, who can also expect an increase in commercial rental values, which alongside the size and location of a property forms the basis of how the rate is calculated by the VOA.
This is then multiplied by a ‘multiplier’ sum, which in Tunbridge Wells is currently set at a ‘standard rate’ of 49.3p in the pound.
Garry Jefferies, managing director of Panoramic Wealth Management in Tunbridge Wells said the increase was the ‘inevitable’ result of government policy restricting supply.
He said: “Since the government started to allow more commercial properties to be redeveloped into residential there has been added upward pressure on commercial rents.”
Mr Jefferies singled out Lonsdale Gardens and neighbouring Clanricarde Gardens as roads where residential development of former commercial buildings was leading to trouble with ‘supply and demand.’
He added: “Until they sort out the issue of supply and demand the rates will keep on going steeply up alongside the rents.”
The complexity of how rates are assessed, after various considerations and reliefs are taken into account, means there is a considerable difference between parts of the town.
Currently a shop on Calverley Road with a premises of 132 square metres has a ‘rateable value’ of £65,000. A 17.4 per cent increase will see the value rise to £76,310.
But a similar sized shop on the High Street, with a premises of 128 square metres, is currently commanding a rate-able value of £29,750, rising to £34,926 if rates go up by 17.4 per cent.
Tunbridge Wells Borough Council finance chief Cllr Paul Barrington-King said: “Business rates are a national tax and the Valuation Office is currently determining the rateable values for 2017.
“This will then be multiplied by the rate in the pound set by central government. Tunbridge Wells is a thriving and economically successful area and we anxiously await the outcome of the revaluation 2017.
“As a council, we will continue to push for the ability to help support and shape the right mix of businesses locally, including the awarding of mandatory reliefs.”
The Government is due to publish a revaluation of business rates for 2017, calculated by multiplying the rateable value of a business with a ‘multiplier’ set by the Treasury.
Colliers advises firms to start planning now for the impact of the changes.
John Webber, head of rating at Colliers International, said: “The 2017 rating revaluation will produce the largest changes to business rates for high street retailers in a generation.
“We now understand that the bulk of assessments have been made.
“Our message is clear: retailers need to start planning for these changes.”