Skip links

Out-of-Town Retailers Win Business Rates Debate

Tenants of England’s most valuable out-of-town retail park have achieved a 10 per cent reduction in their business rates after convincing a tribunal that their trade was significantly hit by the £350 million extension of a town centre shopping centre.

The Fosse Park retail park is located 4.3 miles south west of Leicester city centre and is home to a collection of flagship stores, including Boots, W.H. Smith, BHS and Next. It is reputed to be the most valuable retail park of its type in England, commanding the highest rents per square metre.

In September 2008, the state-of-the-art Highcross shopping centre opened in the city centre. It added more than 55,000 square metres of selling space to the existing Shires shopping centre which was also refurbished to create a total of more than 100,000 square metres of retail space spread over two floors.

Seven Fosse Park tenants applied for a reduction in the rateable value of their premises – and thus their business rates bills – on the basis that the opening of the Highcross centre amounted to a material change in circumstances and had led to a substantial reduction in their turnover. Their applications were, however, rejected by a valuation officer (VO) and their appeal to the Valuation Tribunal for England failed.

The impact of the Highcross centre upon the Fosse Park tenants was controversial and the VO contended that the two developments were mutually exclusive, serving different shopping patterns and needs. It was argued that the loss of trade figures put forward by the tenants were unreliable and in any event irrelevant as the premises had to be valued on the assumption that they were vacant.

In allowing the tenants’ appeal, however, the Upper Tribunal (UT) noted that, prior to the opening of the Highcross centre, Leicester City Council’s own retail consultants had estimated that shopper flows at Fosse Park were likely to be reduced by up to 12 per cent. Turnover information provided by the tenants was an important part of the overall evidential picture and properly informed the valuation exercise.

Whilst acknowledging that there was no direct relationship between turnover and rent, the UT found that hypothetical tenants would have considered that the opening of the Highcross centre would lead to a reduction in trade at Fosse Park and reduced their rental bids accordingly. In the circumstances, the 10 per cent reduction in rateable values suggested by the tenants was reasonable.