Business rates hike to impact London’s West End heavily. An increase in business rates for more expensive properties is expected to affect prime areas like London’s West End, a prominent investment firm has cautioned. The policy, intended to reduce business rates for smaller properties by increasing them for larger ones, has been criticised as “unlikely to save the high street” and likely to “misfire” by investment firm Colliers.
“We hoped Labour’s business rates policy would lower [tax] across the board… Instead, we have a more complicated system that might damage rather than save the high street, stifling investment and growth,” said John Webber, head of business rates at Colliers.
The Non-Domestic Rates Bill will reduce the business rates multiplier for smaller retail, hospitality, and leisure properties by establishing a higher multiplier for properties with a rateable value above £500,000. A property’s rateable value is an assessment of the annual rent it would fetch if available on the open market. Business rates are calculated by multiplying the rateable value by the government-set multiplier.
The introduction of two multipliers is designed to make larger anchor stores, which draw significant foot traffic to high streets, more expensive to operate. While retailers have long demanded business rates reform, the response to the Non-Domestic Rates Bill has been largely negative. High Streets UK has branded the bill a “disaster for jobs, investment [and] growth” as it places “too great a burden” on the nation’s flagship high streets.
London’s West End, with 335 locations exceeding a rental value of £500,000, is the UK’s most valuable retail site, boasting a total rental value of £495m—nearly 28 times that of central Birmingham. Colliers estimates rateable values in the West End could rise by about 30 per cent following next year’s re-evaluation of rents. Should the multiplier increase to 55p, the annual amount owed on these properties will rise from £212m to £274m—a £182,727 increase per property.
“Occupiers of multiple properties in the area need to prepare… It’s no surprise many retailers and hospitality businesses are alarmed,” Colliers commented. “This whole new policy is absurd,” Webber stated. “Why does the government believe it is sensible to penalise larger retail, hospitality, and leisure players with even more punitive business rates taxes? Businesses are therefore preparing for the worst, and it wouldn’t be surprising if expansion or hiring plans are halted.”
