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Paying the right rates

Dealers have been reminded of the importance of questioning their business rates, due to complexities in valuations of their dealerships leading to possible over-ratings.

Property specialists fear that the Valuation Office Agency, which is responsible for assessments, may not fully understand motor retail’s attitude to property.

Different factors are taken into account when producing accurate rateable values, such as a property’s modernity, size, location, age and how well it meets requirements.

Valuation of the dealership for ratings purposes is led by the value applied to its main showroom. Ancillary areas such as parts departments, PDI and valet facilities, service workshops and offices are taken as a percentage of the dealership. Yet in some cases the showroom is modern and recently refurbished while the support areas are older or inferior, said Elliot Simmons, head of motor trade at Edwin Hill Commercial Property, and this should be accounted for.

If workshop facilities are limited and additional space is occupied off site this will make the dealership less valuable in reality, said Simmons. However as the primary value is derived from the showroom, the rating assessment may not accurately reflect these operational difficulties and may be set too high.

Simmons’ team has been working with the Valuation Office Agency to develop a clearer approach.

In Kent, they have established that dealerships will be placed into one of six classes. These range from category one sites, built post-1990 in a primary location to franchise standards, to category six dealerships in tertiary locations.

“It is the intention that this approach will ensure that operators and owners of car showrooms are not penalised by the rating system because of the specialist nature of their business. It has certainly led to a greater understanding of the more complex rental agreements that exist within the industry, and by aligning the evidence to the relevant category, many motor dealerships have seen reductions in their rates liability.”

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