Experts have urged Government to review the business rates system after accusing the system of favouring prestigious London stores including Hackett and shunning declining high streets.
It has emerged Hackett will pay less than half the business rates bill than it would have if the Government had not postponed the business rates revaluation last year for its new Regent Street site, despite the property deal breaking rent records.
According to business rates experts the agreement is an example of the unfair business rates distribution caused by the two year delay to the revaluation which will now take place in 2017.
Property consultant Gerald Eve said menswear retailer Hackett, which last week signed a 15-year deal to lease the former Ferrari store at a street record Zone A rent of £645 per sq ft, will pay a rates bill of £285,000 per year on the ground floor alone.
But if the revaluation had gone ahead as planned, Hackett would have to pay a £767,000 bill, a 170% increase.
It has triggered renewed calls for the Government to “urgently” review the business rates system.
Gerald Eve head of rating Jerry Schurder said: “If the Government really wants to be pro-business and pro-high street, it needs to urgently re-examine its approach to business rates.
“This letting to Hackett at a record rent provides additional proof – were any required – of the perversity of the Government’s postponement decision.
“Retailers in central London, which could evidently have afforded to pay a greater share of the rates burden, are being protected from rates increases, while those in declining high streets up and down the land have to continue to pay an excessive burden until 2017. Rochdale retailers are supporting Regent Street’s leading brands – a situation that is crazy but true.”
Retail expert Paul Turner-Mitchell, director of independent fashion retailer 25 Ten which closed its Rochdale store due to an onerous rates bill, added: “Delaying the revaluation creates unfairness by requiring struggling businesses to subsidise those that have fared better.”
The Government revealed the postponement to the revaluation last year. It believes the move will provide a more stable business environment.
However, experts have criticised the Government for the move, which they believe could push many retailers over the edge.