Rates review sparks shop closure fears in Southwold
Archant Norfolk © 2016
Suffolk shopkeepers may face a property tax ‘postcode lottery’ when business rate changes come in next year.
How are business rates calculated?
By multiplying rateable value by a figure set by government – 48p for small businesses in 2015/16.
Rateable values are measured every five years, based on a property’s annual rental price, and were due to be assessed in 2015 – but the process was delayed to protect small businesses from “sharp changes”.
The national multiplier is yet to be set for 2017/18, but the Southwold and Reydon Society went by an estimated 47p – a penny less than this year.
In September, the government’s Valuation Office Agency estimated a 9.1% rise in rateable value as a result of the 2017 revaluation. In the East, the estimated rise was 3.9%, with a 4% fall for retail properties but a 13.2% rise in the ‘other’ sector, which includes pubs, hotels and cafés.
Some family firms fear the threat of closure after projected fees more than doubled upon publication of new draft ‘rateable values’.
A dramatic increase in towns like Southwold has been brought on by rising rent, say campaigners, who believe businesses could “go to the wall”, despite the government promising a transitional cap on how much bills can rise or fall in the next few years.
According to a spreadsheet produced by the Southwold and Reydon Society, shops in Southwold face an average 180% increase, with one award-winning bakery, the Two Magpies, staring at a 245% rise – from £4,296.40 to £14,827.25 – thanks to a more than three-fold increase in rateable value.
Elsewhere, the society says rates are set to increase by up to 70% in Aldeburgh and 20% in Halesworth, with Woodbridge largely unaffected by changes in April.
"The increase is likely to have a significant impact on the character of the town.
It is recognised that the character of the high street holds great appeal for both residents and visitors."
John Perkins, chairman of the Southwold and Reydon Society, which campaigned against Costa Coffee opening in 2012, blamed rises on the arrival of national chains.
“We warned that, because national chains like Costa and WH Smith were willing to pay record sums in rent, this would have a knock-on effect on smaller local businesses – many of which operate on marginal seasonal profits,” he said.
“Unfortunately, we seem to have been proved right. Rents have soared, and this is reflected in these new business rates.
“We have already lost some local shops, and these increases could lead to many more closures. It would have a severe effect on the local economy, which relies on tourism and people coming to see Southwold’s iconic mix of shops.
“Unless something is done, the only people able to afford to operate in Southwold in future will be national chains – or charity shops, which pay little or no rates.”
The society has written to the district and town council, asking for help to reduce the increase.
Southwold Chamber of Trade also met to discuss a collective approach.
Clare Hart, from My Southwold, which promotes the independent businesses, urged shoppers to continue supporting local traders.
“It is now more important than ever that people get behind their local businesses if they want to keep them in the town,” she said.
The chamber’s Rebecca Bishop, who also owns of the Two Magpies bakery, said: “For a number of small businesses this review will mean an increase in their rates bill of over £10,000 per year. This simply isn’t sustainable for a small business.
“The increase is likely to have a significant impact on the character of the town. It is recognised that the character of the high street holds great appeal for both residents and visitors.
“The effect of the rates increase will be to drive people out of business, leaving only chains or empty premises. The effect on jobs in the town will be significant.”
Through its national body, Suffolk Chamber of Commerce has been lobbying the Government to improve and simplify the system.
Policy director Nick Burfield said: “In terms of revaluations, we are aware that three out of four businesses will see their rate bills fall or stay the same.
“Although for those who will pay more, there is a transitional relief scheme which should soften the blow to an extent, we still have profound concerns about the costs and speed of the appeals procedure.
“In order to avoid shocks such as this in the future, we are also pressing the Valuation Office Agency (VOA) to implement more frequent and less cataclysmic revaluations, allowing businesses to better adapt and adjust.”
A VOA spokesman said: “Rateable values are based on an open market rental value on a fixed date. If those open market values have changed, then rateable values will change with them. For this revaluation, it’s April 1, 2015.
“Rateable values in the rating lists are used by councils to calculate business rates bills. We use a wide range of property information, including rental and other evidence to compare values across similar types of properties in order to set the rateable value.
“We published the draft valuations online six months before they come into force, so businesses have time to plan for any changes. It only takes a couple of minutes to click, find and review a draft rateable value on our website and get an estimate of the 2017/18 bill. If a ratepayer believes the details we hold are incorrect, they can contact us with suggested amends.”