With a new Rating List coming into effect in 2017, Grand Superintendent of Works John Pagella explains why masonic centres and halls could end up paying more
The financial pages of the popular papers may not be everyone’s idea of bedtime reading, but you will have been hard pressed not to have noticed articles predicting the consequences that might follow the recent revaluation of commercial properties for business rates.
In the public mind, businesses occupying property with a high value are assumed to be better able to make a greater contribution to the total tax take than those whose business is run from more modest premises. The logic behind this is difficult to challenge, provided that revaluations are accurate and are carried out regularly. This will mean that changes in relative value between different areas of the country and property types are picked up as changes in value occur.
Unfortunately, that continuous process of revaluation has not happened. Business rates payable in the current fiscal year are based on the 2010 Rating List, which was prepared by the Valuation Office Agency based on values on 1 April 2008. Many changes have taken place since then. It should not therefore come as a surprise that, in many cases, substantial increases in rateable value will form the basis for the payment of business rates from 1 April 2017 when the new Rating List comes into effect.
The Government’s position is that the total revenue raised under the new list will not increase as a direct result of the revaluation, and those facing a steep rise in business rates payable will be helped through transitional relief. The options being considered for transitional relief include capping the year-on-year increase for ‘large properties’ at between 33 per cent and 45 per cent, rather than 12.5 per cent in real terms under previous Rating Lists.
As the definition of ‘large properties’ is likely to be those with a value in excess of £100,000, the majority of masonic centres and halls may not be affected. However, for those that are, a steep increase in business rates could become payable in 2017, with little opportunity for forward planning.
What does this mean for masonic centres and halls generally? They are classed as ‘business premises’ and all will therefore have been included in the revaluation. While it is always dangerous to generalise, it is highly likely that many will face an increase in assessment that will carry though to an increase in business rates payable.
Faced with this unwelcome prospect, the first step is to check the new entry in the Rating List, take specialist advice in relation to the valuation and then ascertain whether the Small Business Rate Relief or other similar scheme might apply.
I cannot emphasise too strongly that rating valuation and practise is a specialist area of expertise. Challenging the Valuation Officer’s assessment and investigating possible reliefs requires knowledge and experience of property valuation, as well as the complex legal implications.
The challenge ahead
While there will be many firms offering to help on a no win, no fee basis, it is important to bear in mind that those offering this service are likely to be interested in the straightforward cases that can be challenged quickly and easily. Retail shops and offices, as an example, are let on a day-to-day basis. Evidence of value is easy to obtain, and the valuation process for rating purposes for these types of property is not unlike market practise.
Valuing masonic centres and halls is, however, more complicated. Open market transactions occur infrequently, and to cope with this the methods of valuation adopted can be complex. By way of example, particularly difficult cases could well involve a valuation approach that aggregates land value and the cost of rebuilding adjusted for age and obsolescence, before decapitalising to arrive at an annual rent.
If this all sounds confusing, you will understand why I am encouraging those responsible for managing masonic centres and halls to check their rating assessment and take advice. Don’t delay. Although there is no time limit at the moment for challenging valuations, if a saving can be made, the sooner the process is started the sooner overpayments will be returned.
Finally, do use the Improvement Delivery Group at Grand Lodge as a point of contact to put appointed surveyors in touch with each other to share knowledge and experience.
‘Valuing masonic centres is complicated. Open market transactions occur infrequently, and to cope with this the methods of valuation adopted can be complex’