An estate agent has spoken out against changes to business rates relief that have seen property businesses miss out.
The 2023/24 Retail, Hospitality and Leisure Scheme for England, announced in the autumn statement on 17 November 2022, provides eligible properties with a 75% relief on business rates, up to a cash cap limit of £110,000 per business.
However, the government guidance states that professional services, including estate agents and letting agents, are not eligible for a discount.
Because the scheme is a temporary measure for 2023/24, the government has not changed legislation and instead will reimburse local authorities who are using discretionary relief powers under section 47 of the Local Government Finance Act 1988 (as amended) to grant relief.
Nigel Keene, of Whiteknights Estate Agents in Reading, received a rude awakening about the small print of the scheme when the company’s business rates came through at the end of last week.
“I spoke to Wokingham Council to see how they could justify the 148% increase in business rates we have seen,” Keene told EYE. “Their response was to refer me to the government guidance which states that estate agents, letting agents and financial services firms, in addition to betting shops, solicitors, banks and building societies, were all no longer eligible for any business rate discount.
“Ironically, travel agents, who offer a similar service to estate agents but for holidays, are eligible. Those businesses that are eligible are actually seeing an increase in the discount to some 75%, whereas we previously received a 50% discount.”
However, the sting in the tail for Keene was discovering that “as estate agents, we were not really entitled to the 50% discount we received last rateable period, so in fact we are now to receive no discount whatsoever, hence the ridiculous price increase”.
Keene believes the upshot of this will be many businesses deciding that high street premises costs are now prohibitive, adding to yet more empty properties around town centres.
“In some cases I am sure you will see businesses calling time on their operations and closing down,” he said.
For Keene, this latest bombshell is yet another example of government incompetence when it comes to the property industry.
“What I think upsets me the most is that, with the exception of the banking crisis in 2008, almost all of the stalling property markets we have seen since – and in truth before, for those of us old enough to remember – have been government induced.
“In 1989 the three-year market crash was as a result of the government’s decision to abolish dual tax relief. In 2016 the market crashed after the government decided to offer a referendum for Brexit and the subsequent ‘yes’ vote saw the housing market disappear almost overnight. I remember we lost 78% of our agreed sales pipeline within a week of that decision.
“There was a well-documented Covid lockdown where we were forced to shut for three months and it took another three to get back to anything like a decent property sales pipeline.”
Keene added: “Even last year, the debacle and naive pledges Liz Truss made in order to secure the Conservative leadership contest saw the market stall again, with estate agents recording sales figures much lower than usual for the last quarter and therefore lower pipelines into 2023.
“The market begins to recover a little this year and then the very businesses affected by ill-considered government announcements are hit with a business rate increase.”
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