Rate rises to affect hospitality operators

31 March 2010 by
Rate rises to affect hospitality operators

Hospitality operators have been urged to take steps to combat expected rises in business rates, due to take effect this week.

Experts have warned that many firms will face an increase in rates despite the recession hitting trade, because the five-year assessment of rateable value is this time based on trading potential of the property and rental values as of 1 April 2008 - when the property boom was at its height.

Research carried out by property consultancy GVA Grimley suggests increases for three-star-plus central London hotels will range between 40% and 60%, with four-star and five-star properties being the worst affected. Some increases will reach as high as 100%.

There are three key steps hospitality operators can take to combat rate increases, according to Dan Mackernan, senior surveyor at property agent Davis Coffer Lyons.

"Review the valuation the Valuation Office sent you in terms of trading assumptions or floor areas; see what other properties are paying in the area and, if you have a case, lodge an appeal with a reputable agent," he said.

Mackernan stressed that it is difficult to keep costs down unless you can actually reduce the rateable value, so he urged operators to see if they qualify for schemes such as hardship relief, discretionary relief from local authorities and the Business Rates Deferral Scheme.

But businesses must be aware that thresholds for small business rate relief (SBRR) and rural rate relief (RRR) are due to increase on 1 April.

Businesses in Greater London can claim SBRR if they occupy only one property and its rateable value is below£25,500 (up from £21,500) or £18,000 for properties outside the capital (up from £15,000).

Operators can claim RRR if the rateable value of the premises is below £16,500 (up from £14,000). The threshold will be £12,500 for petrol stations and pubs (up from £10,500) or £8,500 for a sole shop (up from £7,000).

Time is running out for hotels to reclaim overpaid business rates>>

Hospitality firms face significant rises in business rates>>

By Daniel Thomas

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