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Industrial and Logistics Business Rates

Accurately reflect the rapid pace of change

The industrial and logistics sector has seen significant changes over recent years, with unprecedented growth in demand resulting in higher occupation costs. The move towards online retailing, changing consumer habits, the effects of Brexit on international trade and the lack of supply have all impacted business rates liabilities. Addressing supply chain disruptions and sustainability could necessitate infrastructure upgrades, further affecting property assessments.

 

The rise in business rates liabilities adds to a further squeeze on margins for many businesses in the sector, so ratepayers need to stay informed to manage these increased liabilities effectively. We provide expert support for budgeting and forecasting, can identify and secure potential savings, and minimise risk whilst ensuring compliance.

Impact of Revaluation 2023 on Industrial and Logistics

Above-average increases in Rateable Values (RV) in industrial mirrored the escalating demand and persistent rental growth in the industrial and logistics sector. England witnessed an average rise of 35.6% in large distribution, while Scotland and Wales have seen less growth at 18.1% and 8.2%, respectively. However, these averages hide more substantial increases in specific locations, such as the M1 corridor and Greater London. The rise in Rateable Value wasn’t unforeseen, as the pandemic, the shift towards online shopping, and Brexit’s deferred impacts have led to a record surge in demand for logistics space. Given the limited supply, rental rates have increased significantly, particularly in central distribution hubs, which has resulted in corresponding increases in Rateable Values.

 

 

Changing property valuations

This sector has demonstrated resilience throughout the pandemic with continued rental growth due to higher occupier demand resulting from the move to online retailing, the delayed impact of Brexit and a limited supply of industrial accommodation.

 

This growth has been particularly strong in the distribution sector and has filtered through to more traditional industrial occupiers. Increases in rental values, especially those agreed close to 1 April 2021 (the valuation date for the 2023 Revaluation in England and Wales), directly impact ratepayer liabilities, leading to higher costs for industrial and logistics occupiers.

 

However, not all properties should see such significant Rateable Value increases. As rental growth in parts of the sector continued after April 2021, there is a risk that the Valuation Office Agency may have placed too much weight on potentially inflated evidence and, therefore, overvalued assessments.

 

In England and Wales, Rateable Values can be challenged through the Check, Challenge, Appeal process.

Regulatory compliance

England and Wales

 

Non-Domestic Rating Act 2023

 

The Non-Domestic Rating Act 2023 will introduce potentially onerous mandatory obligations on ratepayers to regularly update the tenure and physical details of all properties within their portfolios with the Valuations Office Agency (VOA).

 

Increasing the administrative burden on businesses, it will require prompt updates to the VOA and annual returns even where there are no changes, with penalty risks for non-compliance. The complexity of business rates management will increase with measures anticipated to be fully in place for the 2026 Revaluation.

 

Material Change of Circumstance (MCC)

 

Legislative changes to Material Change of Circumstance provisions took immediate effect in October 2023. They tighten the scope of MCCs in England so that new legislation, licensing regimes and guidance from public bodies will not be grounds for a change in Rateable Value between revaluations.

 

Completion Notices

 

For buildings that have been temporarily removed from the rating list during redevelopment, billing authorities will be able to issue Completion Notices in the same way as for a new building. The regulatory changes should be in effect from January 2024.

 

Scotland

 

Since January 2023, Scotland’s new legislation has transferred Valuation Appeals to the Scottish Courts Tribunal service. This entails strict deadlines and rigorous requirements for ratepayers and advisors. All appeals against valuations from April 2023 should have been submitted as a comprehensive case with supporting data by 31 August 2023. Learn more about how to appeal business rates in Scotland >

How we can help

Bringing vast experience and industry-specific knowledge, our specialists offer expert insights on minimising business rate liabilities. We understand the complexity of the industrial and logistics sector – from the latest distribution warehouses and large traditional manufacturing sites through to specialist trade counter operations. We use our leading in-house market analysis, compiled as part of our Prime Logistics and Multi-Let Industrial research publications, to help us achieve the best results for our clients.

  • Review and Appeal

    We know when to appeal and when to leave well alone. Our experience of a diverse range of properties and locations across the UK gives us a tangible edge in our negotiations. This insight and our forensic attention to detail translate into successful appeal strategies.

  • Budgeting and Forecasting

    We can provide certainty with the accuracy of rate bills and account for future new builds and other changes in your accrual reports, which are crucial when budgeting for new sites and capital investments.

  • Plant and Machinery

    Plant and machinery can form a significant part of the rating assessment. We can provide a forensic review of the assets valued and whether they are correctly included. This is a highly specialised area of business rates with complex regulations determining the rateability of plant and machinery. Our experts deal with some of the most complex industrial facilities in the UK and have led in developing case law within this area.

     

  • Disturbances and Deletions

    As well as advising on the impact of physical changes, including demolitions and temporary disturbances, we also work closely with the Valuation Office Agency to manage and, where possible, ‘prior-agree’ alterations to assessments to reflect these changes.

     

  • Vacant Properties

    Most properties within this sector are classed as ‘qualifying industrial hereditaments’. They can qualify for six months of 100% empty rate relief when vacant rather than the standard three months. However, industrial properties can sometimes be vacant for longer periods. We work with clients to explore every opportunity to mitigate their liability. Properties can also become redundant or reach a point beyond economic repair. In these cases, we can investigate opportunities to reduce or delete assessments where appropriate.

  • Exemptions and Reliefs

    We ensure reliefs are properly applied. We are at the forefront of devising innovative solutions to problems posed by changes to legislation.

  • Historic Rates Audit

    Our historic rates audit ensures that past errors and overpayments are resolved and refunded.

  • Rates Payment Management Service (RPMS)

    We offer the market leading rate payment management service to ensure you only ever pay the correct rates liability.

     

Case studies

Property types we work with

Key property types we work with. Not sure if we can help? Please contact us.

Manufacturing / Factories

Light Manufacturing
Aircraft Works
Motor Vehicle Works
Ship Yards
Iron and Steel Works
Chemical Works
Pharmaceutical Production
Artificial Fibre Works
Paper Mills and Print Works
Food Processing Centres
Breweries
Distilleries

Warehousing / Storage

Large Distribution Warehouses
General Warehousing
Urban Warehouses
Cold Stores
Wholesale Warehouses
Road Haulage Depots
Self Storage Facilities
Storage Land
Rail Freight Depots
Docks and Harbours
Business Units

Specialist

Builders Merchants
Trade Counters
Petrol Filling and EV Stations
Vehicle Repair Workshops and Garages
Exhaust and Tyre Centres
Rail Maintenance Depots
Computer Centres
Film and TV Studios
Laboratories

Our clients

Some of the clients we work with.

Key Facts

£9.3bn

total Rateable Value handled

£1.3bn

client savings since 2017, £3.8bn since 2010

25%

of the FTSE represented

£1bn

rate liability processed each year as UK's leading outsourced ratepayer

Revaluation 2023

Many businesses may have an opportunity to reduce their business rates liability. Are you one of them?

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