AFTER a welcome Christmas break, the new year has kicked off with many understandably varied business and property predictions, but the consensus appears to be one of hope for a gradually improving year.
Maybe I just read the articles I choose to read, but I feel having optimism in the Northern Ireland commercial property market is an important quality to hold on to. As advisers in the market we are, of course, well used to finding opportunity amidst the changing uncertainties, or at least some clarity within the many variables.
While inflation and higher interest rates are impacting development and investment decisions and market rents and yields remain a little difficult to call (in some sectors anyway), one important overhead for the industry for 2023/23 will be understood much better this week when the new “9th Rating List” is published online by the Land & Property Services (LPS).
Any Northern Ireland-based company’s rates bill is based on their property’s rating assessment (or NAV). Through the pandemic, rates holidays afforded some sectors financial assistance but we are all back paying full rates now.
The 9th Rating List will become effective from April 1 2023 and will update all NAVs in line with rental values as at the antecedent valuation date (or AVD) of October 1 2021. The point of a revaluation is to update and re-distribute the overall rates burden using property value relativities.
This means that some sectors will do better than others when the bills arrive in April. The actual liabilities will only be known when the “Rate Poundages” for the 11 district councils are struck in March, but broadly prime retail values will fall significantly in some places, prime offices may rise and good industrial space is likely to increase in value. The consequence is that office and industrial occupiers may need to budget for higher rates liabilities in 2023/24, while many retailers will see a welcome reduction in their rates bill.
As you might expect, there are plenty of “ifs and buts” in the valuation of property specifics - and that’s the point. The LPS strive to publish an accurate rating list but it’s a very difficult task. The AVD is post pandemic, a time when there was much uncertainty, and as a result we expect there will be opportunities to challenge.
An appeal could be won for many reasons, the values applied may be too high, the floor areas incorrect, a building may have been physically altered, or fallen vacant, or been amalgamated with another. In the case of a hotel or pub the “fair maintainable trade” may have been overestimated by the LPS. I expect the hospitality sector in NI will review these new NAVs very carefully.
There is a “3 stage” Appeal process based in statute. It costs nothing to submit an appeal but be very careful – do not proceed without good reason.
NAVs can go up or down on appeal and an unwise challenge may result in an increased bill. So, while mitigating costs in 2023 will be a key priority for any business, make sure to first take professional advice from experienced rating consultants.
:: Gareth Johnston is managing director at Lisney
