As we reported back in January 2019, over the last 3 years Reading town centre, as an office destination, has gone through a resurgence in popularity for occupiers. It is now very much a key business location within the Thames Valley.
Rents achieved on Grade A offices are now in the mid to late £30s per sq ft, and with the imminent speculative development of Station Hill, it is predicted that headline rents in Reading will break through the £40 per sq ft threshold in the not too distant future.
But with such success and popularity comes the potential for unintended consequences and business challenges.
We predict that occupiers in the Thames Valley region in 2021 will be faced with a hike in business rates as a result of Reading’s increasing success.
Business rates are based on the market rent for any particular property at a given date – known as the Antecedent Valuation Date.
In 2018, the Chancellor announced that the next revaluation will be brought forward by 1 year to 2021, shortening the current rating list to 4 years.
The significance for occupiers is that the next revaluation of business rates will be based on market rents as of 1st April 2019.
Following the significant rise in market rents over the last 3 years throughout the Thames Valley, we predict a potentially damaging knock-on effect for the region’s businesses when it comes to their business rates at the next Government revaluation.
In order to safeguard businesses against this potentially significant increase in overheads and to ensure that any increases are at a minimum, organisations based in the area may wish to consider the following:
- Expert business rates advice:
Before filling out and returning any requests for information from the VOA, consult with a business rates expert, because this information will be used by the VOA to calculate your new rateable value
- Professional lease expertise:
If you are currently negotiating or will be negotiating a lease over the next 18 months, be sure to get professional advice. This includes any rent reviews, lease renewals or the renegotiation of existing leases. All of these lease events will create market evidence which could be used to justify a new rateable value.
As businesses continue to look to Reading and the Thames Valley as a place to locate and do business, the region is enjoying a fantastic office resurgence, bringing with wider economic benefits.
But with success often comes challenges, and businesses across the region should bear this in mind as they think about budgeting for future business liabilities.
For assistance with any of the issues discussed in this article, whether in relation to business rates or forthcoming lease events, our team of expert advisers can help – from ensuring that your rateable value is correctly assessed and kept to a minimum, to helping with the full remit of your lease requirements.
Get in touch now to speak with an adviser.