Improvement Relief, a step in the right direction but not far enough?

12 October 2023

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Rebecca Evans MS, Minister for Finance and Local Government issued a cabinet statement on 27th September publishing the summary of responses to the recent consultation on non-domestic rates improvement relief in Wales. The consultation ran for 12 weeks from 16 May until 8 August 2023.

Respondents to the consultation were generally in favour of the proposals and supportive of the policy intention to support business and other ratepayers to make improvements to the properties they occupy to support their businesses and growth.

The Welsh Government has now confirmed they will bring forward the secondary legislation required to provide for improvement relief, in line with the proposals, with the intention that the regulations will come into force on 1 April 2024.

This is subject to the passage through its final stages in Parliament of the UK Government’s Non-Domestic Rating Bill, which will introduce the provisions under which the relief will be provided.

Whilst introduction of improvement relief is a positive measure that is welcomed, Jane Shankland Director of Business Rates, commented that the scheme as proposed will be limited in its impact.

Jane believes a scheme akin to the Scottish Business Growth Accelerator would have far greater impact.

The Scottish scheme provides that properties that contain new buildings are eligible for 100% mandatory new-build relief until twelve months after they are first occupied or the latter of 31st March 2025 or four years after the entry in the Valuation Roll.

Improved properties that contain buildings are eligible to see no rate increases for 12 months until after the rateable value (RV) has been amended as a result of the improvement.

The Scottish scheme also affords relief to “properties where there is an increase in RV due in whole or part to a change in the way the lands and heritages are being used.  A property that was converted from one type of use to another (e.g. office to hotel may thus qualify for relief”.

Jane commented it’s a missed opportunity that the Welsh scheme provides no incentive to owners of property to invest and improve their existing stock, particularly improvements that would improve the energy performance of their properties and could have real benefit in the climate crisis.

Property owners holding vacant property are liable for empty rates, which can be a disincentive to property owners to invest in improvements especially when faced with an increased rate liability until a tenant is secured. 

It is unfair to exclude property owners from relief, they are already penalised by a full rate liability on their empty property.

It is disappointing that Welsh Government policy does not provide sufficient incentive to actively encourage both occupiers and owners to make improvements to their property.

Cooke & Arkwright have been providing rating valuation advice to The Welsh Rugby Union Limited (“WRU”) and Millennium Stadium plc for many years. They were recently successful in achieving substantial reductions in the assessments of the Millennium Stadium, covering both the 2005 and 2010 rating list. These negotiated reductions yielded savings of c.£3.5m which, crucially, allows the WRU to re-invest in rugby throughout Wales. They advise the WRU across the group portfolio including the National Centre of Excellence in the Vale of Glamorgan. The valuation issues across the WRU portfolio are complex requiring a high level of understanding of the funding and finances of professional sport in Wales. Cooke & Arkwright’s experience and understanding of these issues and application to the rating valuation have yielded these substantial negotiated reductions. The WRU and the Millennium Stadium entrust our work to organisations with the required levels in experience and expertise in dealing with these complex issues. I am glad to say we have this expertise in Wales. I would have no hesitation in recommending ratepayers making use of this Welsh based expertise.

Steve Phillips, Group Finance Director, Welsh Rugby Union Group