pma2157 newsletter 2018 v2 - property managers association€¦ · louise oliver the dolls house,...

September 2018

The Work of the PMA

The President’s Update

PMA Membership Update 2018

PMA Membership

Service Charge Update

PMA Committee 2018

PMA Conference Review 2018

Omnichannel Break Out Session

Member Spotlight - EE

Buisness Rates Update

PMA Charity 2018 - Bowel Cancer UK

Christmas Lunch 2018

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www.propertymanagersassociation.comSeptember 2018

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The PMA was established in 1975 to provide a forum for coordinated action on retailer’s occupancy interests. The membership now extends to over 100 of the UK’s retailers ranging from National multistore retailers to smaller chains. The Executive Committee consists of elected members, supported by several specialist groups and sub-committees. The PMA remains a significant voice for retailer’s property interests, working with and alongside other key organisations to tackle occupancy issues affecting retail property. Landlord and tenant coordination is one key area of focus, together with maintaining high standards of estate management and ensuring occupancy costs are kept at an affordable level. The PMA helps provide the forum for retailer’s property teams, via seminars, an annual Conference and other events and groups throughout the year providing the means and opportunity to coordinate actions.

In my first year as President of our Association it is obvious that there is much good work by my predecessors upon which to build. However, there is more we can do as an organisation to adequately represent the views, needs and concerns of our membership and the retailers and restaurant operators that we represent.

I am keen to help publicise and invigorate the Landlord & Tenant Service Charge sub-committee, so ably led by Karen Whittington. The understanding of our concerns around cost and service levels amongst the leading landlords is well worth the time taken to communicate about these issues.

We must have a louder voice on Business Rates. Whilst they are not wholly to blame for the ills affecting many High Streets, they are certainly not helping. The disastrous appeal system in England means that many retailers are paying the wrong rates for too long. As a Scot, I’m just a wee bit smug that the Scottish Government stuck to the old tried and tested appeals system which is already bringing in RV reductions and cost savings. The inequity of transitional relief, up and down, for large properties in England is so unfair it almost smacks of a

The work of the PMA The President’s update - Jonathan Stockham, Head of Estates

corrupt third world country.

I would like to set up a Rating sub-committee to speak out about business rates, and maybe BIDs. I already have a couple of volunteers but more will be welcome. Step forward please!

When the PMA used to be active on rent review coordination in shopping centres, we made a difference. In this more connected world, we should now be helping each other almost automatically without the need to be “organised” but in my day job as an Estate Manager, I am often disappointed that requests for comparables, for a dialogue or for a coordinated approach to reviews /renewals meet with little or no response from fellow retailers. We can be so much stronger together in keeping costs down!

After a new look and well received conference in Manchester with new sponsors, I am delighted to confirm that LSH and Shoosmiths have agreed to sponsor and help organise next year’s event aswell, hopefully at the same venue. As soon as we have a date, we’ll let you know so you can tuck those early booking discounts away. Many, many thanks to LSH for their support over the years and to Shoosmiths as

well for their recent involvement.

My next main focus as President is Revo in Manchester in September, where the PMA will again have a presence and, after our autumn CPD programme, it’s Christmas!! I would like to see a really big fund raising effort in honour of Patrick Wymer’s chosen charity, Bowel Cancer UK. We ought to be able to make that extra effort for one of our own.

Enjoy the rest of the year, call me or e-mail me if you want to volunteer to shout about rates or service charges or even for the main committee. Otherwise, enjoy the rest of the year!

Jonathan Stockham07881 [email protected]

Louise OliverThe Dolls House, Audley End Business Centre,Wendens Ambo, Saffron Walden, Essex, CB11 4JL

T: 01799 544904 F: 01799 542991 E: [email protected]

Contact us

In my first year

as President of

our Association

it is obvious

that there is

much good

work by my

predecessors

upon which

to build.

However, there

is more we

can do as an

organisation”

“

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PMA membership update 2018

PMA members directory

PMA committee – why sign up?

Employee Benefits Employer Benefits

Time commitment?

We currently have approximately 102 companies listed as PMA Members with a total membership of just under 400 members.

We are pleased to advise that we have some new members joining this year, such as Krispy Kreme, Foot Asylum, JD Sports and Deichmann Shoes.

Thank you to this year’s sponsors of our Members Directory, Grosvenor, Womble Browne Jacobson, Hammerson, Bond Dickinson andBuckles Law

• Develop your role outside of your normal day to day

• Raise profi le externally

• Get involved in working parties – L&T Act Reform.

• Get out of your comfort zone & learn new skills

• Enhance your CV

• Free CPD

• Coordinated approached - LRs/RRs & SC issues for major schemes / Retail Parks

PROPERTY MANAGERSASSOCIATION

MEMBERSHIP BENEFITS

HOW TO JOINRetailers only are eligible for PMA Membership

COST:First (Full) Company Member£300 plus VAT

Associate Mambers£85 plus VAT

To apply contact:[email protected]

• Free attendance to Annual Conference

• Free Business Seminars

• Up to 10 hours CPD at all Events throughout the year

• Free entrance to Revo

• Access to new online membership database

• Opportunity to promote job adverts/own CVfree of charge via the website

• Access to member events & activities via the website

• Copy of Annual Membership Handbook

• Opportunity to be part of the Sub-Committee forums

• Plenty of Networking Opportunities amongstLandlords, Agents and Retailers

propertymanagersassociation.com

PropertyManAsso @PropertyManAsso

• Help grow your team

• Have a voice on an industry body

• Help shape future legislation change

• Steer the committee

• CPD topics – you help choose

• 4-5 committee meetings per year – circa 2 hours

• Picking up small actions from meetings and implementing

• Help organise future events

How to join

Cost

Membership offer for REVO

Join the PMA at Revo and you pay just £150.00 plus VAT and £85 plus VAT for each additional member!

To apply for membership please contact [email protected]

Retailers only are eligible for PMA membership.

First (full) company member £300 plus VAT

Associate members £60 plus VAT pp

There are many more retailers coming to the market who could potentially benefi t from PMA membership, please do put us in touch if you know of anyone who would like to join.

Sol ic itors

B U C K L E S

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The discussions centred around the ongoing issues of “exactly how will this aff ect us” not helped with the vague details of the issued regulations so far, and the consideration that it may fi zzle out much like CRC did. But if it goes ahead it will only tighten, so only being concerned about beating an F may be short sighted.

The tone was that all attempts by Landlords to amend lease terms and issue lease terms with responsibility for MEES present should be resisted as it remains very much a Landlord Capital Cost, and should never hit the Service Charge. Where there may be need for some fl exibility is if an occupier has upcoming works, refi t or wants to re-gear etc. it may well be that rolling up the unit requirements, as to energy effi ciency and dealing with the total issues rather than side lining would be benefi cial to all.

If you need to fi nd out what the EPC rating of your unit would be, it was advised to use reputable operators. BUT only obtain a draft indication rather than a full EPC that would automatically be in the public domain and attracting scrutiny if not at the required level.

Service charge update

Some retailers in the room were already working their way through their portfolios as many units had no EPC’s and a decent proportion of those with EPC’s were not at the right level. Again advice was given to use a reputable operator and obtain an accurate EPC that may diff er widely from the older ones, that historically were often put together using software with various default settings that are no longer appropriate.

MEES in respect to common parts of Shopping Centres and Offi ce accommodation, were also raised in respect of potential liability to upgrade lighting, Air Handling, HVAC and Lift & Escalators etc. if they are found not to be “effi cient enough”.

John GrayJohn Gray Service Charges Ltd01246 [email protected]

“MEES present should be resisted as it remains very much a Landlord Capital Cost, and should never hit the Service Charge”

PresidentJonathan StockhamHead of EstatesSpecsavers Property ServicesD: 01489 862 533M: 07881 724880E: [email protected]

Financial ManagementDavid BroadbentAsset ManagerWhitbreadM: 07725 427251E: [email protected]

Committee Members:

Simon WillietsSenior Portfolio ManagerStarbucks Coff ee Co UK LtdD: 020 8834 5325M: 07957 773051E: [email protected]

Nick KiddHead of EstatesHouse of FraserD: 0207 003 4703M: 07748 920829E: [email protected]

Janet PetoEstates ManagerEEM: 07725 427247E: [email protected]

Jonathan DentEstates ManagerLadbrokes Coral Group Plc D: 0191 388 6421M: 07823 551 929E: [email protected]

Jenny StrathernEstates ManagerPrezzoM: 07710 818686E: [email protected]

Anna Mousoula- SmithEstates ManagerNext Group plcD: 0116 284 2836E: [email protected]

Emma Gelder B&QM: 07388 381648E: [email protected]

Lucy Winzer Acquisitions ManagerPret A Manager (Europe)D: 07825 867 367E: [email protected]

Service Charge RepresentativeJohn GrayService Charge ConsultantJohn Gray Service Charges LtdD: 01245 471050M: 07730 527861E: [email protected]

PMA Committee - 2018

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The annual PMA conference was held in Manchester on Wednesday 9th May 2018 and, for the first time, it was held at the Museum of Science & Industry which worked well as a venue and appeared to be well received by attendees.

The title for the day’s event was “Are you ready to embrace the future?” which was intended to look at the challenges faced by retailers and what opportunities exist to address and, where possible, to overcome them.

Guest Speakers - Morning

Jonathan Stockham, President of the PMA

The first session of the day was an introduction and welcome from the new President of the PMA, Jonathan Stockham. Jonathan introduced the organisation’s new Vice President, David Broadbent, intended to introduce an element of succession planning. Jonathan also expressed his wish that the future president would be a woman.

During his term of office, Jonathan

Ruth Clare and Kirsty Black - Shoosmiths“Lease Renewals – maximising your position to protect the future”

The next session entitled “Lease Renewals – maximising your position to protect the future” was presented by Ruth Clare and Kirsty Black of Shoosmiths. They identified various areas for discussion which included Section 30 ground f, Minimum Energy Efficiency Standards (MEES), length of term, fixtures, rent frees and breaks, rights granted, and interim rent. They also looked at how to accelerate the deal, emphasising the importance of being prepared, and how to get out in the event that you decide not to

PMA Conference Review 2018

set out a few key objectives. The first one being the encouragement for there to be greater engagement with members of the PMA. To enable this, Jonathan will be commissioning a survey of members’ views about what they want to get from the PMA. The other main objective is for members to actively support each other and provide help and information wherever possible.

One of the key functions of the PMA is to provide support and fund raising to charities and Jonathan spoke about the donation of £12,500 made to Team Margot following the Christmas Lunch in 2017. He went on to introduce the charity that has been chosen for support in 2018, Bowel Cancer UK, particularly in light of the news that Patrick Wymer, an associate of the PMA, had been diagnosed with Stage 4 bowel cancer.

By highlighting that they were looking for more retailers to be involved in REVO and anyone who was interested in getting involved could contact him direct.

proceed with a renewal. Of these, MEES was seen to be a particularly hot topic following its introduction on 1 April 2018 and one which is a potential minefield when considering who should pay for any works required, what effect any such works might have on an existing EPC, and how to deal with it when drafting a renewal lease. With the use of helpful case law examples, the session was both informative and interactive!

Paul Shuker - Lambert Smith Hampton “Planning for the future of the High Street”

Next up was Paul Shuker of Lambert Smith Hampton (LSH) to talk about “Planning for the future of the High Street” in which he looked at various challenges faced and whether the current planning system was working. Among the challenges that he identified

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September 2018

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were increasing vacancy rates, the impact of business rates, evolving markets, and the effect on new developments of existing space coming back to the market, given that 8.4m sq ft of space was planned or under construction for delivery by 2020.

Paul went on to consider whether the current planning system that was based on National Planning Policy Framework (NPPF) introduced in 2012 was working. Reference to a document entitled High Street UK 2020 indicated that the guidance provided by NPPF 2012 is out of date. With the market in a state of flux due to a number of factors, there had been a reduction in retail investment meaning that the market was effectively flat. There has also been a shift in development targeted at the leisure sector which was being driven by increased levels of demand for hotels, gyms and cinemas. To try and counter this general reduction in activity levels on other more traditional forms of retail, local authorities had become more active in a bid to influence a more locally led revival.

A revised version of the NPPF has been drafted but appears not to effectively address the needs and

PMA Conference Review 2018 - continued

“SMEs where 600,000 businesses occupying properties with an RV of less than £12,000 were taken out of the system”

challenges faced in the current market but is simply a reworking of the previous system which has been found wanting. Although the consultation period for the revised NPPF has recently closed, there is a need for more input to make the system more relevant and better able to deal with the needs of a continually evolving market.

Jerry Schurder - Gerald Eve“Business Rates – a challenging landscape for retailers”

The final presentation of the morning session was given by Jerry Schurder of Gerald Eve and entitled “Business Rates – a challenging landscape for retailers”. He began by providing a brief review of the business rates structure which had resulted in some beneficiaries, notably SMEs where 600,000 businesses occupying properties with an RV of less than £12,000 were taken out of the system, the proposed switch in UBR multiplier from RPI to CPI in 2020, and the introduction of more frequent revaluations to 3 yearly intervals. He then went on to consider whether the business rates system in its current format was fit for purpose. He identified the imbalance between different types of business operator

which he termed “bricks v clicks”, and that the general burden of tax was too high and was in need of change. This has been exacerbated by the introduction of transitional arrangements over the next few years, one effect of which will lead to punitive rates being payable on large properties.

Jerry then set out a review of the current process where a recipient of a rates demand can check the bill received, decide whether to challenge the bill, and what abilities exist to make an appeal. With the introduction of “Check – Challenge – Appeal” process, there are now key dates that need to be adhered to and where a failure to do so could result in a

fine being payable. Examples were shown of the difficulties of using the Government Gateway to enter information and to make an appeal within the timeframe required.

Jerry advocated the need to make the system work better, particularly for bill payers and their agents, and for the tax system to offer a fairer, more efficient and sustainable property tax. The introduction of annual revaluations would help to eliminate the excessive peaks and troughs that have been all too evident under the current system.

Jonathan DentLadbrokes Coral Group plc0191 389 [email protected]

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Guest Speakers - Afternoon

The Science Museum proved to be a first-rate networking venue over the lunch break and hosted us with quality refreshments.

Russell Loveland - Land Sec

Russell Loveland, from Land Sec launched the afternoon session and led us through some exciting and interesting developments from a landlord perspective. Russell is a senior director heading up their shopping centre portfolios, including leading and innovative centres such as Trinity, Leeds, Westgate Centre, Oxford and Bluewater.

Land Sec continue to believe in the value of physical property and he explained that as landlords, they are trying to provide customers with enhanced experiences and encouraging more aspirational shoppers to their centres across the UK. This includes providing exciting new food and beverage operators, installing new features such as roof terraces, event spaces and free entertainment to encourage all day and evening trade and increase dwell time. They are aiming to provide

innovative shop fit designs and alternative occupiers to encourage new customers – including Tesla and Hyundai and physical space for online only retailers such as Microsoft, Boden and Miss Guided to extend the whole customer experience.

Land Sec are offering shorter, ex Act, flexible leases with rents increased in line with the retail price index rather than open market reviews. Russell also stressed that they are keen to work closely with retailers who wish to optimise sales performance from their properties as they recognise that relocating can be very expensive - encouraging given the high property costs involved, particularly within schemes.

The PMA are keen to hear more from members and the afternoon break out sessions were introduced for the first time to encourage more debate, networking and collaborative focus. We hope you found these useful and welcome feedback on the format and if this is something you would like to see more of in the future.

PMA Conference Review 2018 - continued

Break out session reviews

JP Buckley, Head of Data and Privacy team at Shoosmiths then picked up a topical issue with an informative session titled “GDPR – Are you Ready?” focusing on the General Data Protection Regulations which came into effect on 25 May 2018.

His message was very firmly to treat any personal data of your customers, clients and contacts as if it were your own. This is important legislation as people and organisations that fall foul of the rules will be publicly identified which brings reputational damage and risk.

JP showed how personal data is an invaluable asset to our businesses and his advice was to ensure that companies have a Data Protection Strategy and that employees and consultants understand who is taking responsibility for this new form of governance.

OmniChannel

(Click and Collect) Break out session

In summary from the group break out session;Omni channel retailing is still evolving for many of the retailers in the room.

It was felt that there was a clear split in the shopper demographic and how online is helping to shape behaviour/trends, and this was perhaps most felt in fashion retailing. In broad terms;

20/30 yr. olds – Fully researched via the web/smart phone prior to any visit to a physical store and heavily influenced by vloggers such as Zoella and others. 40 yrs old – some prior research, but not heavily influenced.

50+ Generally felt that most would not have researched prior to a visit.

It is clear that what the consumer expects differs with age. The likes of ASOS and Amazon Prime which offer free unlimited deliveries and returns for a yearly subscription saves both time and cost, when compared to the required travel to retail destinations and the associated costs.

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Member Spotlight

EE Ltd was created following the merger of T Mobile and Orange in 2010 and since then the company has invested billions of pounds to build the UK’s biggest and best mobile network. EE are proud to have been the fi rst to deliver some amazing achievements including fi rst for picture messaging, fi rst for Wi-Fi calling and fi rst for HD voice.

EE Ltd was bought by BT in 2016 and became one of the 6 main areas of business for BT. The BT acquisition took the best of both cultures enabling cross selling opportunities i.e. EE customers taking up BT Sports and BT products being launched in EE stores. There were also cost synergies focusing on renegotiating supplier terms, insourcing and an estate rationalisation.

The EE network is at the core of the brand and has won c90% of all the UK’s mobile network awards in the past 2 years. The success of their network resulted in EE being awarded the Emergency Services Contract from 2020 – this has and continues to involve building new

EE Ltd

OmniChannel (Click and Collect) Break out session - continued

Driving footfall to stores

The group discussed how bricks and mortar retailers by using ‘Experiences in Stores’ where attempting to drive customer foot fall. The John Lewis experience desk was mentioned, where customers will be off ered a ‘concierge style’ service to help them plan their day or purchase one off Gift Experience packages on off er. Equally Game has tried to get ahead of the trend in the downloading of new video games and shared their experience of bringing Gaming Stations instore. This has encouraged customers to stores and increased dwell time along with increased sales in peripheral hardware.There was a debate over the return verses the benefi t of investing is such ventures, especially around ‘experience’s’ and did these really drive incremental sales?

Online food delivery Apps – Impacts on store layouts

There have been major changes in food retailing with the likes of Deliveroo with circa 25% of sales being driven by the Deliveroo App for certain retailers present. This has necessitated design changes

in the layout of stores in order to reduce the number of drivers waiting for order collection at the main entrance. The establishment of bespoke order collection points towards the back of house areas is an ongoing retrofi t requirement. A tax on deliverers?

With the growth of online and in particular the last mile, will retailers be pushed into freight consolidation? Within Bury the local authority has seen a 15% rise in vans within the city centre, so at what point due to environmental issues and congestion does the public or local government seek to streamline the last mile within the delivery chain. Will the consumer be expected to play its part and possibly be forced to use a central collection point within major urban centres?

David BroadbentCosta Coffee07725 [email protected]

masts in far fl ung places of the UK! EE are also very proud of their people and are continually investing in training and development - they were very proud to be awarded the number 1 position in the Sunday Times Best Big Company to work for in 2018.

EE has one of the largest customer bases in the UK, which results in 34 million visits a month to their website, 3 million store visits a month and 3.5 billion calls a month to their call centres. These customers transact across the outlets – online, on the phone and in our retail shops.

EE Retail currently trade from a total of 620 stores in 6 diff erent formats.

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These include showcase stores, layout stores, shop in shop (both in Argos and Sainsburys), the cabin, mid mall and the retail truck. A percentage of the portfolio is run by franchise partners and they are an important part of the retail team. The showcase stores allow EE to show the best of their devices and services in an interactive environment including touch screen displays where customers can search for products and check local network coverage. There is also an area dedicated to helping customer resolve their technical issues providing customers with ongoing excellent customer care. This format has been opened in Tottenham Court Road, Oxford Westgate,

Nottingham Victoria Centre, London White City and London Stratford. The retail team are also undergoing a layout refi t of all stores allowing them to trade in a more innovative way and transact using tablets rather than the traditional tills. This delivers an improvement to the customer journey and the service received and makes better use of the space for customers.

The roll out of the shop in shops allowed EE to open their network to a new customer base and deliver a cost-eff ective Sainsburys and Argos to identify more opportunities and expand this format of the portfolio.

Janet Peto MRICSEstates ManagerTel: 07725 427247Email: [email protected]

Member Spotlight - EE Ltd - continued

The mobile formats help EE work towards their goal to be within a 20 minute drive time of 95% of the population of an EE retail store and open up in more remote areas. This allows EE to trial in areas where they are not sure a permanent store would perform and helps deliver an important marketing message where they are investing in new masts to improve the network. There has recently been a specifi c focus on Scotland reaching the more remote areas and customers.

“The mobile formats help EE work towards their goal to be within a 20 minute drive time of 95% of the population of an EE retail store and open up in more remote areas.”

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Business Rates Update

While the press this summer was dominated by the performances of the England football team, Brexit and the political machinations of various current and former members of the Government, a less glamorous but equally important subject has been racking up the column inches: business rates.

In what is proving to be a very difficult year for retailers and casual dining operators, the amount the sector pays in rates – especially when compared to online competitors – has become a highly emotive issue, with numerous calls for radical reform as part of efforts to save the high street. It is easy to see why: retailers pay over £7 billion a year in business rates, and despite some tinkering in recent years the costs just seems to continue escalating.

While nobody has ever liked paying rates, genuine discontent is a relatively recent phenomenon. I regard October 2012, when the Government postponed the 2015 revaluation for two years – ostensibly for ‘certainty’, but in truth to avoid damaging headlines at the 2015 general election – as the catalyst

for ongoing complaints about the system. At that time, in the depths of a recession that was hitting some regions harder than others, the rebalancing from a revaluation couldn’t come soon enough. Instead, Government cynicism prolonged the pain for those most in need of relief.

Considerable lobbying from all quarters saw the Government instigate a series of reviews. While they were never likely to achieve total satisfaction given their requirement for a fiscally neutral outcome, the reviews provided opportunity for stakeholders to consider how the tax could be reformed or replaced.

The Government rejected calls to replace business rates and reaffirmed its commitment to a property-based tax, something which business was mostly in support of. The outcome of the reviews did include some positives. SMEs, including small retailers, were undoubtedly the main beneficiaries, with the small business rates relief scheme made permanent and doubled in scope, effectively taking 600,000 properties – about a third of all assessments – out of rates liability.

Another success was the move to link annual Uniform Business Rate (UBR) increases to CPI rather than the discredited RPI measure of inflation, which came into effect in April 2018. A commitment to revalue more frequently in the future – at least every three years – was also to be welcomed. More frequent revaluations means bills that better reflect prevailing economic circumstances and share the rates burden more fairly.

Disappointments

The list of disappointments with the reviews is, unfortunately, much longer, so a few edited lowlights will have to suffice. Perhaps the crucial failing is the Government’s refusal to address the burden that business rates place on businesses in general and the retail sector in particular. It asked what lessons could be learnt from other jurisdictions, but did not even comment on the fact that UK business rates are the highest recurring property tax in the world. The official response to these observations has always been that the Government’s focus is on delivering a competitive corporation tax, but it is worth considering how many retailers might have been

saved by a reduced rates burden. They would have been delighted to have been in a position to pay tax on profits.

Another major concern for retailers ignored by Government was the ‘bricks vs clicks’ issue, ie: the perceived unfair rates treatment for those occupying expensive retail premises compared to those operating from distribution warehouses (or, worse, from those basing their logistics overseas). Put simply, the burden of business rates on retailers is now too high, and liabilities need to be reduced. The Government is at long last beginning to consider issues around digital taxation, but this can only be effective if any additional revenue is used to reduce the rates paid by retailers.

There are also structural issues with the revaluation system. The transitional arrangements create perverse inequalities at both end of the spectrum – those most needing the relief of a big fall are denied what is rightfully theirs, while many were exposed to enormous jumps in bills of up to 42%. Structuring the system in this way meant that hard-hit retailers in towns such as Bolton and Stockport continue to subsidise

- Jerry Schurder, Head of Business Rates at Gerald Eve

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more affluent locations to this day. If we are going to have transitional relief, the Government has to find a fairer way of funding rather than denying reductions to those whose values have fallen.

Appeals

The final major disappointment that is affecting all businesses is the quite appalling new Check, Challenge, Appeal (CCA) system that was introduced to accompany the 2017 revaluation.

While the Government’s concerns with the historic volume of appeals is understandable – there were nearly 1.1 million appeals against the 1.85 million properties assessed in the 2010 revaluation – CCA is an example in how not to go about making effective change.

The Government says that over 70% of appeals lead to no change in value and they were therefore clearly speculative and unnecessary, hence the justification for radical change. However, the primary reason that businesses felt forced to challenge their assessments was because this was the only way to obtain from the VOA the evidence they had used in order to set their rateable values.

As the key trade organisations said repeatedly to government, if the taxman justifies his assessment to the taxpayer, then if it is supported by the evidence, the taxpayer will have no incentive to challenge and will accept the valuation.

CCA is burdensome, putting the complete onus of proof on businesses, but this pales into insignificance when compared with the way in which the VOA has implemented CCA. Time-consuming, punitive and opaque, the system is nigh-on impossible to navigate. The VOA web portal is, frankly, unfit for purpose, frustrating appellants at every junction, with questions that are either impossible to answer or irrelevant. Hoops to be jumped through and tripwires to be navigated litter the new process. There is a new regime of fines for providing inaccurate information about a property even if one did so simply as a careless oversight. Forgetting to reveal that you installed an air conditioning cassette in the store manager’s office could cost you a £500 fine.

The entire system has the feel of something that has been cynically designed to be impossible to use, so dissuading appeals through the

sheer amount of time, resources and patience it takes to register a challenge. The professional rating bodies are lobbying hard to bring all the CCA problems to the attention of ministers, but retailers should take every opportunity to bring this issue to the attention of their local MP and directly with Treasury and local government ministers, as this fiasco cannot be allowed to continue.

VOA

The Government announced in the Spring Statement that the next revaluation will be brought forward a year to 2021, based on values on 1 April 2019. The VOA will therefore need to shift staff shortly to prepare for this revaluation – heaping further pressure on the stretched appeals process, and undoubtedly causing more issues. The VOA is massively under resourced as it is, which the government needs to address, in terms of numbers of employees, their calibre, the quality of the VOA’s IT and programming capabilities and, to be brutally honest, there also needs to be a sea change in its attitude towards ratepayers.

It is sadly no longer the independent organisation that always held the ambition of reaching a fair valuation based upon analysis of all available

rental evidence and a professional approach throughout. The VOA seems now to be simply operating as an arm of the Treasury, defending its assessments fair or otherwise and seeking all opportunities to find new things to assess for business rates. When even the phones in supermarkets on which to call local taxi services are being identified as separately rateable properties, the question ‘where does this end?’ is inevitably raised.

Revaluation frequency

While the move toward more frequent revaluations is to be welcomed, it does not go far enough. Annual revaluations, as undertaken by a number of jurisdictions including Hong Kong and the Netherlands, remain the gold standard that the UK should be aspiring to. In addition, technology needs to be better utilised to reduce the gap between the valuation date and when revaluation bills come into effect. Reducing the two year gap to a year has already been announced for Scotland’s revaluation in 2022, so why not in England for 2021?

Annual revaluations can only be delivered if (1) there is an obligation to register all leases so that the information is automatically available

Business Rates Update - continued

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Business Rates Update - continued

to the VOA, and (2) if the need to appeal is removed by the VOA becoming more transparent and justifying its valuations to ratepayers. If businesses are satisfied that their bills are correct to within an acceptable tolerance, they won’t appeal on the basis that values will be updated 12 months later anyway, and of course there would be no need for transitional arrangements either.

Reducing the burden

But even if annual revaluations and a reformed appeals system are put in place, not all retailers’ concerns will have been addressed. Business rates are a fixed tax – currently raising circa £29 billion a year – with the revaluation only updating how it is split between the nation’s businesses. For revaluations to be effective, the total take should be allowed to rise and fall – as with all other taxes – in line with changes in property values, with a fixed UBR - somewhere close to its original rate of 34.8p, perhaps. Businesses will be far more accepting of a local property tax at this level, especially if the movements in their bills more closely match their wider trading performance.

Lobbying

Bill Grimsey’s second review of town centres, published in July, was the latest in a wave of lobbying designed to bring about some kind of reform. But while the report clearly has the best interests of retailers at heart, caution is needed when considering his proposals to get rid of business rates entirely and replace them potentially with an online sales tax.

Firstly, the tax he suggests wouldn’t raise anywhere near as much as is currently paid in business rates by retailers. And with the Government still in need of every penny it can lay its hands one, it seems very unlikely such a scheme would be adopted. Secondly, it is only right and fair that retailers (and other businesses) make a contribution towards the locations they operate in. Streets need to be swept and roads maintained, and a local property tax is the fairest – and easiest to collect – way of paying for this.

Instead, retailers should look to reform the system so that is fairer to all. A reduced burden for all businesses – incorporating the annual revaluations and the floating tax take outlined above – remains the eventual goal, but in the medium-term moves towards fairness between the high street and online retail need to be embraced. An online sales tax is a potential tool for the Government to top up any revenue it loses from lower business rates.

In the short term, as we approach the Autumn Budget, there are a number of measures that businesses can realistically call on the

Chancellor to implement – at little or relatively modest cost.

The first is to mirror the Scottish Government in deferring rates increases when an existing property is expanded or improved and also before rates apply to a new build property. The Scots will delay increases for 12 months, but if this is to genuinely incentivise and not penalise investment, I would argue for a longer deferral period. Such a measure is cost free, arguably, as without the investment no additional rates accrue in any event.

Secondly, in order to address the manifest unfairness of the transitional arrangements penalty, all properties whose assessments reduced at the 2017 revaluation should see their liabilities fall to their correct level from April 2019 and no longer have their reductions capped. Denying full and immediate revaluation decreases negates the purpose of revaluations.

The BRC has called for a UBR freeze until the next revaluation. Whilst this would have not insignificant revenue implications for the Exchequer, in the context of business rates being by far the highest comparable tax

internationally, there is an unarguable case to support a freeze.

Jerry Schurder is head of business rates at Gerald Eve

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PMA Charity 2018

Bowel cancer is the fourth most common cancer in the UK. Sadly, around 16,000 people die from the disease each year, making it the second biggest cancer killer. However it shouldn’t be because it is treatable and curable especially if diagnosed early.

Bowel Cancer UK, the UK’s leading bowel cancer charity, fund targeted research, provide expert information and support to patients and their families, educate the public and professionals about the disease and campaign for early diagnosis and access to best treatment and care.

Bowel Cancer UK

Venue: London Hilton Metropole, Edgware Road

Date: Thursday 20th December

Time: 12:45pm - 6:45pm

Format of the event12:45pm Drinks Reception

1:45pm – Lunch

Guest Speaker

Raffl e and Auction

PMA Awards Presentation

Price£75pp plus VAT.Includes 2 course lunch with cheese, tea/coff ee

Reserve your places nowComplete and return your booking form:By email [email protected] post Event offi ce, The Dolls House, Audley End Business Centre Wendens Ambo Saffron Walden Essex CB11 4JL

Application formMember name:

Company name:

Tel:

Email:

Address:

Places and Tables availableNo of places required:

How to payInvoice required Yes No

Debit Credit Card

Cheque payable to Property Managers Association

VAT Registration Number: 666 2816 11

Booking Conditions: This booking form represents a VAT Invoice: Booking is fi nal and no refunds will be made in the event of cancellation.

For more information or to sponsor this event please contact:

Louise Oliver 01799 544904Raising funds for

Price £75pp plus VAT

Christmas LunchThursday 20th December 2018

London Hilton Metropole,Edgware Road

The charity’s vision is a future where nobody dies of bowel cancer but they can’t achieve this alone. Former PMA member, Patrick Wymer and seven friends walked 60 miles along the Pembrokeshire Coast raising a very impressive £65,000 for the charity and Velindre Cancer Centre, where he is being treated for bowel cancer.

It’s because of supporters like PMA, Patrick Wymer and his good friends Bowel Cancer UK can continue to save lives and improve the quality of life of everyone aff ected by bowel cancer.

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Retailers working together

Connect with PMA... Tell us what you think and share your views with the members and Committee!

[email protected] Property Managers Association PropertyManAssn

www.propertymanagersassociation.com

pma2157 newsletter 2018 v2 - property managers association€¦ · louise oliver the dolls house,...

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