Most uniform business rate predictions are being calculated on a faulty basis, and the actual rate for 1995 will be lower than they suggest, according to Gerald Eve’s Robin Goodchild.
Speaking at the firm’s “Rating Revaluation” seminar this week, Goodchild said that business rates will fall from 41.6p in 1993-94 to 35p in 1995.
“Other estimates of the UBR have assumed either a minimal change in rateable values or runaway inflation between now and 1995,” Goodchild argued.
Based on “more realistic” inflation forecasts of 3% for this autumn and 4.5% in 1994, along with increases in rateable values of 30%, Gerald Eve has produced the 35p UBR multiplier.
Other forecasts waver around the 40p mark. Herring Baker Harris recently estimated the new UBR at precisely 40.6p.
Goodchild added: “Inflation would have to be increasing at 7% pa by September 1993, and sustain that level of increase for the next 12 months, and rateable values increase by only 20% on average for the UBR to be 40p in 1995.”
Using data from the Investment Property Databank, his firm calculated average increases in rateable values of 30% by taking average sectoral rental growths and weighting them according to the occurance of the various property types in the rating lists.
Goodchild says: “Many believe that rental values have fallen significantly since 1988. Although this is true for some sectors, it is not true for the majority because rental values increased so much during 1988 and 1989.”
The firm’s research highlights expected winners and losers in the 1995 revaluation, with City of London offices forecast to gain from a 50% rates reduction, while Birmingham offices will suffer with a 60% rise.
“Overall, in the retail, office and industrial sectors rental growth has been greater away from London and this will be generally reflected in increased rates bills outside the South East of England,” says Goodchild.
