Ratings – the road to revaluation

by Dentons



On 1 April 2017 the business rates revaluation will take effect. This in itself is cause for significant concern. However, the ratings world is currently a maelstrom of upheaval and controversy, such that the revaluation is but one small element of a wider ratings transmogrification.

What's going on?

As well as being the first revaluation since 2010, there have been several key ratings cases impacting the ratings system. There are also changes to billing and collection, the calculation of the rate multiplier, the period between revaluations and rates retention. More importantly, a complete overhaul of the business rates appeal system has been proposed. This will decidedly and adversely impact on ratepayers' ability to successfully challenge their assessment.

Why is this important?

The purpose of this article, and the series that will follow, is to highlight the key legal, valuation, procedural and administrative changes taking place in the ratings system.

Business rates are a tax on property. Given that most businesses require property to function, the impact of revaluation is highly relevant to bottom lines. Put simply, the impact of revaluation could be the difference between profit and loss.

Asset managers should be focused on revaluation. There may be empty property considerations if the asset is unoccupied. If it is leased, revaluation could be relevant to a tenant's ability to pay rent to the landlord. This could impact on the market value of affected properties. The consequence of this could be a deflationary effect on rental value and an inability for a landlord to raise the rent at review. This could be an amelioration of the effects of revaluation from a tenant or prospective tenant's perspective. However, it is unlikely to be welcome news for an owner of commercial property if the rental income is adversely impacted upon and / or the value of the reversion suffers as a consequence of revaluation. In the event of a significant rates increase, asset managers are likely to face pressure from tenants seeking to reduce their liabilities under their leases.

Developers will be impacted by the changes. Minimising or removing rates liability pending development will be a key aim. The revaluation could also adversely impact on pre-lets and the rent realisable on first letting. This could have a knock-on consequence on development budget appraisals.

Enterprises with particular and specialist properties are sensitive to revaluation. Where there are no rental comparables, different valuation methodology applies. The valuations undertaken may result in notably skewed outcomes that may be grossly disproportionate or bear little resemblance to the 2010 valuation.

Investors will need to factor in the impact of revaluation on their investment.  In particular, whether increased rates liability negatively affects the anticipated return on investment and, indeed, the length of time required for that return to be made. 

Tenants who hold more than one floor or one property on an estate will need to be aware of changes in the Valuation Office Agency's (VOA) approach to valuation. The approach is unlikely to be tax neutral.

What is our route map?

In the run-up to revaluation, Dentons will be producing a series of articles covering the following topics:

  • Revaluation
  • Valuation methodology
  • Material change in circumstances
  • Challenging the list
  • Reliefs
  • Next steps and reform

Business rates

Business rates are a tax based on the rateable value (RV) of business property. The tax is payable by owners and occupiers of property.

The VOA calculates a property's RV. For the purposes of the 1 April 2017 valuation list, the RV is calculated at the Antecedent Valuation Date (AVD) of 1 April 2015. A multiplier (also known as the Uniform Business Rate (UBR), is then applied to the RV. The outcome of this calculation is the amount of business rates a business will be liable for, prior to the application of any relief.

The UBR is not a single figure applicable to all businesses. In England, outside Greater London, there is a distinction between "standard" businesses and "small" businesses . There is no right to appeal the UBR.

For 2017/18 the proposed multipliers are:

  • Standard business – 0.479 (47.9p in the £)
  • Small business – 0.466 (46.6p in the £)

In Greater London, the distinction between standard businesses and small businesses is maintained. However, Greater London has levied a business rates supplement (BRS) where a standard business has an RV of more than £55,000. For 2017/18 the BRS will remain at 0.02 (2p in the £). The purpose behind this particular business rates scheme is to fund Crossrail. This BRS will continue to be levied until the Greater London Authority's borrowing is repaid.  This is expected during the 2030s. According to the Greater London Authority, less than 20 per cent of business properties within Greater London are affected by the BRS.

The City of London is entitled to set its own rate. In 2016/17, this was the equivalent of 0.05 (5p in the £) on top of the standard and small business rate multipliers.

There are various specific reliefs that are available to qualifying ratepayers. These will be explained in more detail later in this series. The business rates regimes in Wales and Scotland also differ slightly from the regime applicable in England. 

How to ascertain your business rates

Business managers can obtain the data necessary to ascertain their business rates liability following revaluation. A link to this can be found on Gov.uk:


For property portfolios or where a business holds unique or specialist property, there may well be merit in instructing a specialist ratings surveyor to assist at revaluation. Specialist surveyors can test valuations, manage the revaluation process and assist in any challenge to the list. We will look at the appeal process and the controversial proposed changes, later in the series. 

We hope that you find this article and the accompanying series helpful.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Dentons | Attorney Advertising

Written by:


Dentons on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at info@jdsupra.com. In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at: info@jdsupra.com.

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.