Growth and Infrastructure Bill

Memorandum submitted by Colliers International (GIB 23)



Please find set out below the representations of Colliers International in relation to the above bill. Colliers International is a leader in global real estate services. We employ over 700 professionals in the UK and are leaders in the area of retail advisory services. We also act for a range of clients in relation to business rates. We act for a number of retailers on rating matters who occupy the High Street including Poundland, Wilkinsons, The Co-operative Group, Signet, Holland & Barrett, Aldi, Nationwide Building Society, West Bromwich Building Society, TUI T/A Thomson and First Choice, Sally Salons, Vodafone, Thorntons, A F Blakemore T/A Spar, Coventry Building Society and Connells as well as a number of landlords with High Street property and a number of independent retailers. These are our observations:

Working of the Market

On a daily basis we are asked by clients, particularly retailers, to supply estimates of business rates liability for new stores or for the relocation of stores. Our estimates are given over a five year period in many cases and those figures are then put into financial models along with other costs to those businesses in order to make an educated and sound business decision as to whether to proceed with the opening of a particular property or not.

As we know, many retail centres have seen significant falls in rental value since 2008 (I will give more details below) and as a result the business rates liability as a proportion of the overall outgoings has increased and would be expected to stay at that level up to 2015.

Many retailers and other businesses however have been working on the assumption that from 2015 following a revaluation with levels of value at 2013 (1 April 2013 – Antecedent Valuation Date for the 2015 Rating List) that the rates liability and the proportion of outgoing will fall to a more realistic level.

The postponement of the revaluation until 2017 will mean in these situations the following:

i. Businesses will have to renegotiate rent in a downward direction as a result of the increased outgoings.

ii. The rental values of the ‘losing’ retail locations will reduce and therefore the capital value will potentially fall and assets held in these locations could fall below levels resulting in defaults on loans and repossession/administration etc.

iii. The retailers will no longer take the units and empty units on the high street will remain empty for the next four years until a ‘proper revaluation’ is undertaken.

iv. In locations where a delay in the revaluation will be welcome in the short term (predominantly Central London) there will be an upward pressure on rental values. This will however come to a shuddering halt in 2017 when the Valuation Office Agency eventually undertake a revaluation and businesses find out that the artificial upwards pressure on rental values over the preceding years has resulted in a disproportionate level of rates liability. This will then mean a correction in the market which will again result in a rent reduction even in these areas.

In essence the Government are ‘throwing a spanner’ in the workings of the market creating artificial pressure on rents in the best areas and an artificial negative effect in the poorer areas predominantly outside of Central London. By’ kicking the can’ of the revaluation further down the road, all they are doing is storing up further problems meaning future Governments will look to reasons why revaluations cannot take place (there will always be one) and we could be left with a situation that instead of a 2 year postponement we could end up with a situation as we did from 1973 until 1990 of a 17 year gap.

Colliers International Retail Research

At Colliers International we have the benefit of the annual Midsummer Retail Report which documents the changes in retail. Rent maps showing the prime Zone A for a retail centre in the country is shown, which allows us to document the changes over the last 20 years. By using the data from 2008 (the Antecedent Valuation Date for the 2010 rating list) and the 2012 data we can see a picture of how rental values over that 4 year period have changed.

It could be argued that the trends over that 4 year period would continue over 5 years but using the data that we have to hand it illustrates the point quite clearly that with the exception of Central London, the rest of the country would benefit from a rating revaluation in 2015. This is a summary of the research:


Percentage Change

East Midlands

- 20%


- 20%


- 21%

North East

- 26%

North West

- 21%


- 23%

South East

- 19%

South West

- 19%


- 27%

West Midlands

- 23%

Yorkshire & Humberside

- 23%

Enclosed is a breakdown of the full list, which shows, out of 415 centres, 344 have shown falls in value, with 126 showing falls of 25% and more.

This compares to the West End showing an increase of 26% over that same period.

It should be noted that these are changes in the prime areas of these towns, the secondary areas are likely to show even greater reductions.

Portas Review

The Government claims be helping the High Street and the Mary Portas Review was designed to show the Government listening and helping town centres. Of the 12 centres in the original round of towns designed to be helped with money from the Portas Review, only 6 of those centres are covered by the research of Colliers International, these being Croydon, Bedford, Dartford, Stockport, Stockton on Tees and Wolverhampton. The average reduction in rental values between 2008/2012 for those towns is 28.3%.

Any benefits of the Portas Report and any limited amount of Government money sprinkled on the centre will be wiped away by the additional rates paid in these towns over the period from 2015 to 2017 as a result of the Government announcements.

Winners and Losers

By its very nature, business can often look at things in a very short term way particularly companies that have to report quarterly, half yearly, or even those reporting on a yearly basis. However even though businesses potentially appear to be winners in the short term they will in our opinion ultimately lose out from 2017 onwards because of overinflated rents and a distorted market. It is in no-one’s interests to see town centres up and down the country close their doors. In our Midsummer Report in 2012, we warned of shopping centres being in terminal decline, if this proposal goes ahead, this will just accelerate that terminal decline and potentially put the final ‘nail in the coffin’ of many town centres throughout the country. This is not in the interests of any business wherever it operates for this to happen.


In the announcement made by Brandon Lewis, the Parliamentary Under Secretary of State for Communities and Local Government, there is nothing that refers to consultation or anything to suggest that a considered view has been given to the implications of this announcement.

In the penultimate paragraph, they mentioned that once ‘the economy has recovered fully from the financial and political crisis this Government inherited from the last administration’, then a revaluation will resume in 2017. The very fact that a revaluation is not happening in 2015 is reason enough that the financial turmoil will continue in retail centres up and down the country.

In the announcement the comment was made that the decision will ‘avoid local firms and local shops facing unexpected hikes in their rates bills’ and giving them ‘tax stability’ to help them grow. It is quite clear from the figures set out above that any local business would be expecting the 2015 revaluation to result in a reduction in real terms in their rates liability. Nobody wants certainty of a tax bill they know is artificially high.

Even in Central London, this announcement is not good news, this is like the Government announcing a stamp duty holiday during a housing boom. This will unfortunately end in tears further down the road.

What is more worrying is that the Government are completely out of touch with what is going on around the country. Colliers International are working closely with the Local Data Company to highlight towns where the level of void retail units is increasing in order to put pressure on the Valuation Office Agency to reduce rating assessment. It may be difficult to find space on the pavement in New Bond Street, but there is plenty of room in the shopping areas of Wolverhampton, Rotherham, Stockton on Tees and the like.

Although the focus of this letter centres on retail the issues apply to both the office and industrial/warehouse sectors throughout the country.

We would urge the committee to take out Clause 22 of this bill and proceed with the revaluation in 2015 as originally intended.

November 2012

Prepared 21st November 2012