Research at the University of Liverpool has found that retail rental values have declined twice as much in parts of the North West and North East as in London.
Business rates are calculated against the rentable value of the business property. Current rates were set in 2010, but based on valuations from 2008, before the economic downturn.
The study, undertaken with the Local Data Company, analysed the changes in vacancy rates, occupancy profile and rental values across nine retail centres in the UK including Cleethorpes, Grimsby, Rochdale, Salisbury and a further four within London boroughs.
This revealed the extent to which business rates have moved out of line with rental values in some areas since the last revaluation of business rates and found considerable extremes of rental values for 2013 across retail categories within these areas.
Dr Alex Singleton, from the University’s Department of Geography & Planning, said: “This preliminary analysis highlights the importance of taking into consideration how local context can impact business rental values. Regional and national assessment of change since the last business rate revaluation can mask considerable variation between and within towns.
“It is clear that policy makers and researchers need better retail data to help those involved to understand these emerging imbalances.
“Better data about retail facilities and the people who use them can act as a platform to develop these creative solutions, and to encourage a reinvigorated, economically viable and socially responsible retail sector.”
Matthew Hopkinson, Director at the Local Data Company, added: “This research is unique in that it has taken business rates evaluation data at a local level, modelled it and established hard numbers around changes to the 2008 Valuation Office Agency (VOA) values.
“The variance in vacancy rates are already well publicised but now we can now see a 52% variance in rental values of the nine pilot areas.
“The differential in adjusted business rates to the current VOA figures between a fashion shop in Rochdale and a fashion shop in London W12 are over 100% different and hence why one sees the significant acceleration of closures north of the Watford Gap versus London and the South East.”
The research was funded by the Economic and Social Research Council
