HIGH streets across Scotland face a bleak future after it was announced rents will not be reviewed until 2017 at the earliest, experts have warned.
The new fear for the high street emerged as traders will be stuck with their current business rates for the foreseeable future – rates described as crippling by many businesses.
The warning came after Finance Secretary John Swinney said he would follow the lead of the UK Government and delay a business rate revaluation by two years as part of his "commitment to a competitive business environment".
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But delaying the review from 2015 to 2017 means shops and other commercial properties are still being rated on their value at April 2008, before the financial and property crash.
The rate businesses pay is pegged to the value of their premises, with each business allocated a particular banding – equivalent to householders paying council tax.
However, while homeowners and tenants are benefiting from a freeze in their council tax, retailers and other owners of commercial property will face a 2.6% hike in their business rates from next April.
The percentage increase is based on September's rate of retail price index (RPI) inflation, which has been climbing sharply since 2008. Business owners have already had to accommodate a 5% increase in 2009, followed by a 4.6% hike in 2011, and a 5.6% rise in April this year. Only April 2010 saw a reduction in line with the previous September's 1.4% fall in RPI.
Many business owners contend that if their premises were revalued in the current market their banding could be reduced, substantially cutting their overheads.
Peter Muir, director at commercial real-estate specialists Colliers International in Glasgow, said: "The 2015 rating revaluation would have helped hundreds of thousands of retailers throughout the country and it is a shame that the high street appears to be the Tiny Tim of this year's Christmas Carol."
He added: "All classes of property are affected but principally retail, and you just need to wander round high streets or older shopping centres to see the amount of voids already in place."
Tim Bunker, partner at commercial property consultants Ryden in Edinburgh, said the delay in revaluation meant rates bills would now be kept artificially high, further damaging the high street.
He said: "A revaluation in Scotland in 2015 would have provided a competitive edge, with more up-to-date valuations producing fairer rates bills and, in turn, attracting business here. The Scottish Government has missed a trick.
The Scottish Retail Consortium is calling on the Scottish Government to freeze business rates. Its spokesman Richard Dodds said: "The Scottish Government has done some very good things for business, but on this point – business rates – there will be some very mixed views."
However, CBI Scotland said that while it opposed the UK Government's decision to postpone revaluation – subsequently copied at Holyrood – it did not support a deviation north of the Border.
Director Iain McMillan said: "On the basis that we wish to keep the Scottish and English rating systems on a level playing field and maintain identical rate poundages on both sides of the border, we believe that the Scottish Government has taken the right decision."
A spokeswoman for the Scottish Government said: "We will hold the next Scottish rates revaluation in 2017 and by then this Government is confident we will have a range of economic powers through independence that can help us create further competitive advantages for business in Scotland."