The rapid rise of e-commerce during the pandemic, and the race for space to satisfy demand during Covid restrictions, hugely and temporarily distorted the property market now putting occupiers of industrial buildings at risk of financial collapse with huge hikes in tax next year amid soaring costs experts have today warned.
There are more than 550,000 industrial buildings across England and Wales which will see their overall rateable value, used to calculate the business rates tax, rise 27.1% up £3.95 billion from £14.57 billion to £18.52 billion under next year’s revaluation.
Robert Hayton, U.K. President at the real estate adviser Altus Group, Britain’s largest ratings advisory, said “most industrial buildings aren’t big sheds occupied by online retailers but house economy incubators, start-ups, and employment supporting manufacturers. It feels like the valuers of the new draft lists have deployed a one size fits all approach, and this could be hugely damaging.”
New rateable values, which will form the basis of business rates bills from 1st April 2023 until 31st March 2026, are based upon a valuation date of 1st April 2021. The UK Warehousing Association has written to the Chancellor, Jeremy Hunt, saying “this was at a time when warehousing was propping up the economy during lockdown and consequently property values were disproportionately high.”
The Government have shelved plans for an online sales tax saying that the revaluation in 2023 addresses the tax burden imbalance between online retailers and bricks and mortar sales.
Analysis of official Government data by Altus Group shows across Amazon’s vast fulfillment centre’s, data centre’s, corporate offices, tech hubs, delivery stations and headquarters in England and Wales it’s total rateable will rocket by £56.16 million up 35% from £160.64 million to £216.80 million next April.
Altus Group estimate Amazon’s business rates is set to rise by around £28.75 million next year and could cost the online giant around £100 million in extra tax over the 3 years of the new cycle before any available reliefs taking into account inflationary rises due in 2024/25 and 2025/26.
Amazon’s 7,000 sq metre delivery station located on Woodlands Industrial Storage Estate in Longtown Carlisle saw the biggest percentage increase in rateable value up 145% from £154,000 to £377,500.
Whilst one of Amazon’s most advanced sheds located in Tilbury, just outside London, the company’s largest in the UK and the 10th largest warehouse in the world, has seen its rateable increase by £5.26 million up 74.29% to £12.34 million.
When the revaluation comes into effect next April, Amazon will have 10 large distribution warehouses with a rateable value more than £5 million up from just 1 currently.
Hayton added “it came as no surprise to see large increases for e-commerce sheds reflecting supply and demand immediately prior to the valuation date, but the suspicion is that this market distortion has been applied across all industrial buildings which is likely to lead to hardship for many struggling businesses.”