Inflexibility over rates is discouraging businesses from setting up
In the 15 years that we have been operating O'Brien's and now Synge & Byrne retail units and coffee shops in Northern Ireland, our single biggest issue has been commercial rates.
The 26 local councils will be reduced to 11 in 2015 and the long overdue revaluation of non-domestic rates is under consultation and will be rolled out before the end of 2014.
We welcome both, but will they actually make any difference? On its own website, the Department of Finance and Personnel states that "business rates are a long established local property tax... proportionate to the individual rental level of the property".
My concern is, how is this figure is calculated when rents have fallen by 30-50% in some cases and rates have remained static?
We recently considered a large Belfast city centre ex-bank site that was empty for more than three years.
The landlord simply wanted his rates paid and a small turnover percentage for rent. However, the rates alone made the site too expensive to be viable – a major issue for a city centre desperate for regeneration.
I believe what is being ignored in the current process is the administration of the rates function and its interaction with local businesses.
For example, Land and Property Services is our single biggest supplier in Northern Ireland and we will be operating 15 separate sites by the end of 2014.
However, it is impossible to have a single point of contact no matter how hard we try.
The inefficiency of this is quite staggering from a commercial standpoint.
In addition, the rates agencies are very bureaucratic and don't allow for flexibility.
I have seen a number of cases when a business has got into difficulty and despite having been able to negotiate a reasonable survival plan with the bank, Vat office, landlord etc, it has been given seven days to pay its rates bill, with no recourse for negotiation.
The current 50% discount for 12 months for vacant premises is not an incentive for a new business, if they will be closed in two years due to a crippling rates bill. Making certain councils bigger is simply moving the issue.
Unless we change our approach soon, my fear is that in another 15 years, rates will still be our biggest issue.
- Damien Garvey is director of the BWL Group