Retail designer giants, such as Dolce & Gabbana, Burberry, and Alexander McQueen are not escaping the consequences of the UK’s 2017 Revaluation as business rates bills get pricier, Colliers International has revealed.
“[I]t would be unrealistic to presume that even the top brands will be totally immune from such massive increases to their property costs.”
For the third year in a row, business rates have increased in central London.
Colliers International said: “Retailers are about to find that new bills for the year dropping on their doormats will show the third set of rises since the 2017 Revaluation, putting the bills for many to more than double what they were three years ago.”
“The assumption that we can carry on hitting such businesses for six – however successful they are – and that this won’t have any impact is naïve, particularly as the Brexit uncertainty continues, and consumer spending is reined back.”
From the start of the new financial year, high-end retail will have to pay off their business rates bill.
Using Old Bond Street and New Bond Street as examples, Colliers International has calculated that the combined value of the money high-end brands in these areas will have to pay equates to over £90m. In 2016-17 it came to £40.352m; it has more than doubled in just three years.
“The hike has come about because, those with high value properties in England (£100,000 Rateable Value), which constitutes a large part of prime west end, are affected by ‘upwards phasing’ in their bills, and will this year see their rises ‘capped at 49% plus inflation’,” Colliers International explained.
This means that high-end retail stores in central London could have a rates bill that will be 50% more expensive than the previous year.
“It is really important we support our top fashion industry, given the taxes it raises, jobs it provides, and tourism it provides to London. We need to reform our punitive business rates system—and we need to do it now.”
This 50% increase is on top of the 42% increase (plus inflation) introduced in 2017-18, and the 32% increase (plus inflation) of 2018-19.
In total, the business rates bill average has increased by 124% in three years. A more specific example of the direct impact it is having would be Dolce & Gabbana: in 2016-17, their bill was numbered at £620,400—this year, it is £1.42m.
“Clearly, London is, and will remain, a major location for high-end fashion, and will continue to lead the catwalk world,” said John Webber, head of business rates at Colliers International.
He continued: “But it would be unrealistic to presume that even the top brands will be totally immune from such massive increases to their property costs.
“The assumption that we can carry on hitting such businesses for six – however successful they are – and that this won’t have any impact is naïve, particularly as the Brexit uncertainty continues, and consumer spending is reined back.
“Let’s hope this is not another example of the government overcooking the golden goose.”
Webber concluded: “It is really important we support our top fashion industry, given the tax it raises, jobs it provides, and tourism it provides to London. We need to reform our punitive business rates system—and we need to do it now.”