Checkpoint 2024: Managing through three ratings lists

Is the recent reform of business rates good or bad news?

In some respects, the recent reform of business rates has benefitted ratepayers with a fairer system – one in which property values are better aligned with the economic conditions of the day. However, these changes have also put ratepayers at a major disadvantage, having significantly curtailed the right to challenge the rates they are being charged by the Valuation Office Agency (VOA).

One reason for this is that business rate revaluations now take place over shorter periods (a 3-year cycle instead of 5-year cycle), a change introduced in April of last year. At the moment, ratepayers retain the same appeal rights as before, being entitled to start an appeal action at any point. But the opportunity to do that has now been reduced by two years. The right to appeal: A race against the clock.

When we look ahead, the constraints over appeals will get even more acute. Specifically, the right-to-appeal process is scheduled to get a further two cuts, severely curtailing the right to appeal from the entirety of a cycle to short windows of opportunity. From 2026, the right to appeal will be open for six months only. From 2029, ratepayers will have just three months to submit challenges.

Time is not on ratepayers’ side, and it is paramount for ratepayers to understand that. Even now, with three years to bring a challenge to a rate decision, there is significant pressure on ratepayers and their representatives to build cases. Given the amount of information required to collate the right evidence, this process becomes a race against time. For example, the evidence provided by newly signed lease agreements can sometimes take years to appear in the public domain.

The reforms have placed other burdens on appellants to quickly produce evidence to show why a VOA’s property value decision is wrong. The previous system allowed ratepayers to submit a business rate decision appeal and then provide the evidence to back that claim up at a later date – a policy that granted ratepayers more time to gather the right information. Today, however, if a ratepayer disputes the VOA’s decision, the legal basis of the challenge and a proposed alternative rateable value is required at the outset.

Navigating the new rates system Clearly, proactivity has become paramount, but appeals still require the same rigour and professionalism to build solid cases as ever before. In the past three years, Altus Group has been developing tools to ensure we can represent our clients with the same standards of skill, accuracy, and diligence as we always have done, creating smart and digitalised work processes that are better able to interrogate valuations decisions.

We have launched in-house software that has revolutionised our ability to undertake valuation assessments and contest rental values. These new systems can work together to pull swathes of information into one place, making it more accessible for surveyors and allowing for rental value comparisons to be made between properties. Surveyors can now more quickly and accurately identify potential cases for appeal. We also have digitalised massive amounts of data on properties – such as floor plans, building specifications, and surveyors’ notes – which help us to build cases efficiently and with diligence.

Harnessing data and technology to tackle the pressures of the new rates system means time is not as big an enemy as it could be. Better, more organised access to information provides a basis of knowledge from which to handle the side effects of shorter valuation cycles on ratepayers. It is also worth remembering that the VOA is now compiling valuation lists quicker than before – and with limited resources. This means there is even more potential than before for the information relied on to be unwittingly problematic. Skilled surveyors can spot these discrepancies but while time is no longer on our side, the technology is.