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Educating Schools and Colleges on Business Rates Changes

Nov 08, 2016

The news has been full of scare stories about the impact of the forthcoming 2017 Rating Revaluation with stories covering double digit rates liability increases, following publication of the Draft Rating List on 30th September.

The Revaluation which takes effect from next April, affects all non-domestic property across England, Wales and Scotland and effectively rebases rating valuations to reflect changes in hypothetical rents between 2008 and 2015.

For many ratepayers the stories of vast increases are misleading as rating valuations are falling across many retail, office and industrial assessments.  There are, however, notable exceptions in locations that have experienced growth and improvement, for example, across London.  

Another largely unreported sector facing increases are educational establishments, including schools, colleges and universities; many of which are valued for business rates according to build cost, instead of the more conventional rental method.  The construction indices that track tender price and build cost have experienced growth over the valuation period, compounded by rising labour costs and a rise in raw materials.  

Independent schools are facing rises of an average of 26% with small to medium sized schools facing the greatest increases together with schools in the South East of England.

It is strongly recommended to check the new Government web portal which can be viewed via this link to establish what your proposed new rateable value is (for England and Wales) and budget accordingly if you are facing an increase.

For the majority of schools the detailed valuation breakdown will not be available to view online and needs to be requested directly from the Valuation Office.

The whole process of requesting valuations, deciphering what it actually means when you receive it and deciding whether to review the assessment is particularly complex and not for the 'faint-hearted'.

In addition to this, there is a new appeals process on the way!  It consists of three stages: check, challenge and appeal. These proposed changes are for England only, with the Scottish and Welsh devolved administrations considering changes of their own.

The Government sees the reforms as a way of simplifying the whole rating appeals system, whilst also adding greater transparency aiming to save substantial sums of money.  It will require more involvement from anyone wishing to challenge their rateable value as their evidence needs to be gathered earlier and the case built from the start.

The previous speculative nature of some appeals will now be confined to history with cases only progressing where solid grounds have been established.

This is particularly challenging for specialist property types such as schools and colleges where the valuations are complex.  In some cases the Valuation Offices own valuations might contain out of date referencing notes and determining if a review is viable is not straightforward.

For complex property types such as schools and colleges it is therefore advisable to bring in the services of a Chartered Surveyor who specialises not just in business rates, but who also has an understanding of the rating valuations of educational property types.

They can also explain the impact of Transitional Arrangements, which phase potentially very large changes in rates liability following publication of a new Rating List.  There are separate systems for England, Scotland and Wales.

Regardless of the potential obstacles to a successful rating appeal, it is clear that now that the Draft Rating List is published, schools and colleges need check their details in preparation for 2017 and seek advice if they want to review their level of assessment.

Paul Giness - Beattie Partnership.jpg

Paul Giness, Partner at The Beattie Partnership


Want to find out more?
You can watch the recording of Paul's excellent webinar for us here.

Category: Minerva blogs

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