Cutting business rates could unlock around £1.75bn worth of development over the next five years, which is more than the development value of the Shard, Walkie Talkie and Cheesegrater combined.
According to a report published today by the British Property Federation (BPF), British Council of Shopping Centers and British Council for Offices, reassessing how rates are applied would also enable businesses to create almost 4,000 jobs in the same timeframe.
The report also estimates that, in the past three years alone, rising business rates could have led to the economy missing out on as much as £670m worth of new development and up to 6,000 new jobs.
The study argues that, as occupiers have pushed for more competitive rents, landlords have been left to absorb approximately three-quarters worth of any hike in rates.
“Business rates are often seen as a cost for occupiers; one that gets in the way of growing their businesses,” said Ion Fletcher, director of policy (finance) at the BPF. “This research shows that business rates also harm landlords and in particular they discourage new, economically valuable development.”
Meanwhile, Ed Cooke, director of policy at the BCSC, remarked: “We have heard numerous times from the Chancellor that this government are ‘the builders’. This research by independent expert economists shows clearly that business rates inhibit beneficial property investment and development, and therefore are a barrier to much needed growth and productivity.”
In light of their study, the bodies who published the report would like to see government reevaluate business rates on a more frequent basis. At present, business rates are reassessed every five years – although a two-year delay in the cycle issued in 2012 has created a seven-year gap more recently – which the representative bodies argue is not often enough to pick up changes in the wider economy.