Over 17,000 shops closed in the UK in 2022. About a third of all the closures were due to insolvency, to which the cost of living and energy crises were certainly contributing factors, but when you realise that business rates make up over 40% of all taxes paid by retailers, it is clear that this is all too often the last straw.

Whilst the current 2023 valuation reflects rateable values at 1 April 2021, specifically to reflect the impact of the pandemic,  different sectors were affected differently by the pandemic and, given the drastic drop in retail rents, the adjustment still falls far short of compensating the average high street store.

The calculation of business rates is linked to the September inflation figure in any given year. This year the rate was 6.7%. That will represent a huge increase in rates bills for 2024 and will be exacerbated for many smaller businesses if the current rates relief schemes are brought to an end in April 2024 as is currently anticipated. A sector that is already on its knees is ill-equipped to cope with the additional levy and this may well push a number of businesses over the edge.

The expected rise in rates will have a knock-on effect for landlords too, as a struggling business is likely to default on its rental obligations and, in the worst-case scenario, leave a property vacant, where the landlord will ultimately have to pick up the rates bill.

What the UK government doesn’t seem to grasp in its bid to save the high street through the Levelling Up and Regeneration Act, which has just received Royal Assent, is that the reason properties are remaining empty for so long isn’t because greedy landlords are holding out for higher (or in some cases, any) rent, but that tenants simply can’t afford to pay the business rates.