Tesco finds ‘every little helps’ as it saves millions in property revaluation

News Article

Tesco has seen a reduction in its business rates across a number of its stores, which will see the retail giant save £105million over the next five years.

The news follows widespread criticism about the unfairness of business rates which has resulted in many smaller independent shopkeepers – who are already battling the growth of online retailing – being penalised in areas where property prices have surged.

Communities’ secretary, Sajid Javid, has already promised to “level the playing field” between online retailers and high street shops, and Clive Betts, Chair of the Communities and Local Government committee has pledged that he will press for a timetable for a review.

Mr Betts said: “There is a fundamental problem in the way valuations for business rates are done and that needs to be looked at.

“High street shops seem to pay more than a similar unit out-of-town. That doesn’t feel right when there is a public and political view that high streets need some form of protection. There’s also an imbalance between property-based businesses and online sellers.”

An analysis of Tesco’s business rates by industry specialists CVS, has found that the supermarket’s rateable value has fallen by 8.6 per cent to £825.78million compared with 2010, following a write down of the value Tesco’s property portfolio by £4.7billion.

A spokesperson for Tesco said: “Tesco is one of the UK’s largest ratepayers, paying almost £700million in rates in 2016-2017, and the 2017 revaluation will not alter that trend.

“Tesco has a significant physical presence across high streets and town centres, and fixed costs such as business rates are placing huge pressure on our operations. The current rates system is unsustainable and needs urgent reform.”

Maisie Yau, from Palmers, said: “Many retailers are finding it increasingly difficult to remain profitable and a hike in business rates can often cause businesses that are already on an economic precipice to be pushed over the edge.

“No-one benefits from seeing high streets half empty and in certain circumstances it may be possible to negotiate a reduction in rent in order to continue trading.

“At Palmers, we have contacts with fellow property professionals who have particular expertise in this area.  We would urge any business which is feeling the squeeze to speak to us as early as possible so that we can put together a remedial plan to help their business not only to survive, but thrive.”

For more information on Palmers services to businesses, including commercial rental agreement negotiations, please contact us.