What is hindering your market at the moment?

When it comes to dealing with Business Rates, one of the barriers to trade, as such, comes from ill intended government intervention. For example, measures taken to transfer valuation tasks away from the Valuation Office Agency (VOA) to rate payers. This can be observed in ‘Check, Challenge, Appeal’ where rate payers are compelled to ‘Check’ the VOA’s facts, as they have asserted, before being able to discuss wider value significant matters. In addition, the proposed ‘Duty to Notify’ will compel rate payers to “fess-up” where the VOA has made a mistake.

Under current plans, lying low will not be an option. I’m concerned many rate payers shouldn’t be burdened by such a high cost of compliance, whether the facts are currently accurate or not. As a result, the VOA will no longer have to adhere to the existing statutory duty to maintain an accurate rating list in the same way. While this might help reduce the cost of running the VOA, the increase in compliance costs for all ratepayers is likely to far exceed the potential savings to the public purse. Increasing the cost of compliance for business is inefficient and would make the UK less competitive. I understand some might say rate payers are “getting away with it” if their Rateable Value is too low, however, I would counter this and say the VOA is “getting away with it” by not maintaining an accurate Rating List if, indeed, this is the Government’s concern. Shifting the burden onto all rate payers, along with more frequent three yearly revaluations, is taking the proverbial sledgehammer to crack a nut.

What opportunities are you seeing in your market at the moment?

The relatively recent occurrence of more frequent revaluations, now three-yearly from April 2023, could mean greater variance in valuation accuracy, especially in fast-moving markets and where there’s a paucity of comparable evidence. Inevitably, this works both ways, but it seems more likely that expert valuer opinions should prevail, which is perhaps interesting considering the significant resources being poured into artificial intelligence (AI). Speaking of AI, it does appear to be a very interesting tool. How much it might save in terms of time and a possible increase in quality, I’m not sure. I’m open to what it can do and, like many, I’m keen to keep testing to see how it might assist. At the moment, there isn’t a significant enough advantage to integrating AI fully into my workstream, but it seems undoubtable that refined tools will become commonplace in areas such as case law, compliance searches, amalgamation of comparable evidence, and many more, I’m sure.

What’s the biggest change you have seen in your sector throughout your career?

Business Rates are linked to CPI inflation; therefore, the Government receives consistent, reliable tax/rates revenues unaffected by the corrosive effect of inflation. However, because Business Rates are linked to other inflationary matters, not just commercial property price changes, there’s huge pressure forming due to the systematic shift in the way we do business. Working, trading, and shopping via the internet has created a new platform through which to do business which has been, and will continue to be,to the detriment of some commercial property asset classes. However, despite this, the Government continues to seek increasing revenues from Business Rates. This fails to consider the declining ability of, say a high street retailer, to pay the rates because the tax burden is being placed on fewer (or lower value) rating assessments.

When I started my career, the Uniform Business Rates (UBR), otherwise known as the rate multiplier, was about a third of the Rateable Value. It’s currently a sizeable 54.6% for anything with a Rateable Value over £51,000 in England and in Wales it’s 56.2%! It seems obvious to tax the cause of the change in demand but it’s not that simple.

The internet has enabled online shopping, flexible working, AI, etc. This structural shift in how we live, consume, and do business is becoming the “new norm” but whilst significant investment is still developing out the frontier, governments globally are less willing to tax them for risk of stifling innovation. So, on the one hand, we have an inelastic property sector where taxes weigh heavy due to years of compounding tax increases against a backdrop of increasing competition from agile online enterprises. Add in the fact Business Rates punitively tax unproductive empty properties, its little wonder reform is being called for.

What differentiates the service you offer to your clients, from your competitors?

Colliers’ Rating team provides the full circle of business rate services; rating valuation, Accurates (rate audit and compliance) and Rate Account Management. The breadth and depth of the team is unparalleled. Working closely with colleagues enables me to share and draw on our expertise or simply bounce ideas around all in our endeavours to solve the problems faced by clients.

Similarly, with a forward-looking mindset, this means that robust growth is achieved organically when recruiting new talent due to the collaborative investment in the team. It may sound a bit cliché, but in a mature, well-established market, it’s the overall effectiveness of the team which materially differentiates Colliers from the competition.

What advice would you give your younger self when you first started your career in property?

  1. Assume you’re not the smartest person in the room but make sure you’re not at the other end of the scale!
  2. Be curious and expect to share on an emotional level. People want to work with people. Work out who you are and what value you provide.
  3. View a property from the other side of the street or drive another route on the way back from a property inspection. A different perspective often identifies different risks and opportunities.
  4. Listen to what isn’t being said and anticipate.

​ What is hindering your market at the moment?

When it comes to dealing with Business Rates, one of the barriers to trade, as such, comes from ill intended government intervention. For example, measures taken to transfer valuation tasks away from the Valuation Office Agency (VOA) to rate payers. This can be observed in ‘Check, Challenge, Appeal’ where rate payers are compelled to ‘Check’ the VOA’s facts, as they have asserted, before being able to discuss wider value significant matters. In addition, the proposed ‘Duty to Notify’ will compel rate payers to “fess-up” where the VOA has made a mistake.

Under current plans, lying low will not be an option. I’m concerned many rate payers shouldn’t be burdened by such a high cost of compliance, whether the facts are currently accurate or not. As a result, the VOA will no longer have to adhere to the existing statutory duty to maintain an accurate rating list in the same way. While this might help reduce the cost of running the VOA, the increase in compliance costs for all ratepayers is likely to far exceed the potential savings to the public purse. Increasing the cost of compliance for business is inefficient and would make the UK less competitive. I understand some might say rate payers are “getting away with it” if their Rateable Value is too low, however, I would counter this and say the VOA is “getting away with it” by not maintaining an accurate Rating List if, indeed, this is the Government’s concern. Shifting the burden onto all rate payers, along with more frequent three yearly revaluations, is taking the proverbial sledgehammer to crack a nut.

​ What opportunities are you seeing in your market at the moment?

The relatively recent occurrence of more frequent revaluations, now three-yearly from April 2023, could mean greater variance in valuation accuracy, especially in fast-moving markets and where there’s a paucity of comparable evidence. Inevitably, this works both ways, but it seems more likely that expert valuer opinions should prevail, which is perhaps interesting considering the significant resources being poured into artificial intelligence (AI). Speaking of AI, it does appear to be a very interesting tool. How much it might save in terms of time and a possible increase in quality, I’m not sure. I’m open to what it can do and, like many, I’m keen to keep testing to see how it might assist. At the moment, there isn’t a significant enough advantage to integrating AI fully into my workstream, but it seems undoubtable that refined tools will become commonplace in areas such as case law, compliance searches, amalgamation of comparable evidence, and many more, I’m sure.

​ What’s the biggest change you have seen in your sector throughout your career?

Business Rates are linked to CPI inflation; therefore, the Government receives consistent, reliable tax/rates revenues unaffected by the corrosive effect of inflation. However, because Business Rates are linked to other inflationary matters, not just commercial property price changes, there’s huge pressure forming due to the systematic shift in the way we do business. Working, trading, and shopping via the internet has created a new platform through which to do business which has been, and will continue to be,to the detriment of some commercial property asset classes. However, despite this, the Government continues to seek increasing revenues from Business Rates. This fails to consider the declining ability of, say a high street retailer, to pay the rates because the tax burden is being placed on fewer (or lower value) rating assessments.

When I started my career, the Uniform Business Rates (UBR), otherwise known as the rate multiplier, was about a third of the Rateable Value. It’s currently a sizeable 54.6% for anything with a Rateable Value over £51,000 in England and in Wales it’s 56.2%! It seems obvious to tax the cause of the change in demand but it’s not that simple.

The internet has enabled online shopping, flexible working, AI, etc. This structural shift in how we live, consume, and do business is becoming the “new norm” but whilst significant investment is still developing out the frontier, governments globally are less willing to tax them for risk of stifling innovation. So, on the one hand, we have an inelastic property sector where taxes weigh heavy due to years of compounding tax increases against a backdrop of increasing competition from agile online enterprises. Add in the fact Business Rates punitively tax unproductive empty properties, its little wonder reform is being called for.

What differentiates the service you offer to your clients, from your competitors?

Colliers’ Rating team provides the full circle of business rate services; rating valuation, Accurates (rate audit and compliance) and Rate Account Management. The breadth and depth of the team is unparalleled. Working closely with colleagues enables me to share and draw on our expertise or simply bounce ideas around all in our endeavours to solve the problems faced by clients.

Similarly, with a forward-looking mindset, this means that robust growth is achieved organically when recruiting new talent due to the collaborative investment in the team. It may sound a bit cliché, but in a mature, well-established market, it’s the overall effectiveness of the team which materially differentiates Colliers from the competition.

What advice would you give your younger self when you first started your career in property?

  1. Assume you’re not the smartest person in the room but make sure you’re not at the other end of the scale!
  2. Be curious and expect to share on an emotional level. People want to work with people. Work out who you are and what value you provide.
  3. View a property from the other side of the street or drive another route on the way back from a property inspection. A different perspective often identifies different risks and opportunities.
  4. Listen to what isn’t being said and anticipate.

What one thing would you change about the industry if you could?

In my opinion, greater transparency is key. Indeed, a culture that actively promotes it is essential for truly effective governance. While good governance is a familiar concept, it seems the values underpinning it are coming under greater pressure, partly due to financial pressures and short-term political agendas.

More specifically, the Valuation Office Agency (VOA) is funded by HMRC. Consequently the VOA serves HMRC as its client and treats ratepayers as customers. As responsible taxpayers, we should hold the Government accountable for the services we elect to receive.

It seems fairer to operate an open book policy about the rental evidence used, and importantly the analysis adopted, by the VOA to derive its Rateable Values. The VOA, at the taxpayer’s expense, is paid to assert Rateable Values but doesn’t currently need to proactively justify how it reaches its opinions. This seems somewhat backwards in an “open source” data driven world. We know valuation isn’t a science, it can’t be because interpreting demand is subjective. However, I believe positive change would come from reforming dated attitudes of “defence of the list” to one which is more collaborative. If a Rateable Value seems even slightly excessive, the Valuation Office Agency should be commended for correcting the error and improving accuracy. In my opinion, the VOA’s now historic “right first time” mantra has had a negative influence on the attitudes and culture of those responsible for maintaining an accurate Rating List and so, whilst the system isn't perfect, there is always room for improvement.

What one thing would you change about the industry if you could?

In my opinion, greater transparency is key. Indeed, a culture that actively promotes it is essential for truly effective governance. While good governance is a familiar concept, it seems the values underpinning it are coming under greater pressure, partly due to financial pressures and short-term political agendas.

More specifically, the Valuation Office Agency (VOA) is funded by HMRC. Consequently the VOA serves HMRC as its client and treats ratepayers as customers. As responsible taxpayers, we should hold the Government accountable for the services we elect to receive.

It seems fairer to operate an open book policy about the rental evidence used, and importantly the analysis adopted, by the VOA to derive its Rateable Values. The VOA, at the taxpayer’s expense, is paid to assert Rateable Values but doesn’t currently need to proactively justify how it reaches its opinions. This seems somewhat backwards in an “open source” data driven world. We know valuation isn’t a science, it can’t be because interpreting demand is subjective. However, I believe positive change would come from reforming dated attitudes of “defence of the list” to one which is more collaborative. If a Rateable Value seems even slightly excessive, the Valuation Office Agency should be commended for correcting the error and improving accuracy. In my opinion, the VOA’s now historic “right first time” mantra has had a negative influence on the attitudes and culture of those responsible for maintaining an accurate Rating List and so, whilst the system isn't perfect, there is always room for improvement.

The changing demographic within the UK has resulted in a situation where, for the first time, there are more people of pensionable age than there are children under the age of sixteen. This, coupled with the aging workforce in the construction industry, both within the contracting and consultancy markets, means that it is an alarming time for the industry. Satisfying labour workforces and recruitment demands has become a very real and pertinent issue for both contractors and consultancies.

Recruiting people into the industry is not a new challenge, but the changing demographic of the country is exacerbating the problem, requiring immediate attention. ​

Challenges caused by the construction skills shortage

It is essential to view these challenges within the broader context of the changing modern world, including increased flexible working, EU worker policy, the implementation of modern construction methods, and the efficiencies being driven through these technologies.

However, in the short to medium term, the aging workforce is straining the labour supply, leading to increasing labour costs. Wages have risen by 6% from a shortage of skilled tradespeople.

This is putting upward pressure on outturn construction costs as clients and developers strive to make their schemes viable. ​ Contractors are grappling with inflation, supply chain disruption, and a diminishing supply of workers to choose from as costs increase. Some contractors have even been forced to cease trading due to these challenges. All this has been too much for some contractors and we have seen some notable companies cease trading.

In terms of growth, the UK will look to construction to kickstart the economy in Q3 2023 and beyond. However, the drain of resources will put sustained growth at risk and make it difficult to meet the aforementioned numbers over the next few years.

Construction has historically leaned on workers from the European Union to satisfy this demand but according to the ONS, between 2020 and 2017 there was a 42% decline in the number of EU workers, compared to just a 4% drop from that of UK workers.

It remains to be seen what the effect of the ‘Back to Work’ budget will have on the industry after the government has relaxed migration requirements for key workers and whether this will mitigate some of this decline.

What are some of the schemes trying to help?

The government is trying to do its bit by the introduction of schemes to flood the younger end of the industry with the next generation. One such initiative is the introduction of the T Level in construction. This new technical qualification can be pursued after GCSEs and is the equivalent of 3 A Levels. Schemes like this can be used in collaboration with companies to meet their resourcing requirements and prepare the apprentices for the workplace. The courses are two years long and include nine weeks minimum working with an employer as an industry placement.

Although similar to apprenticeships, T levels will be more classroom-based, and give young people a route to academic achievement in a technical role.

In addition to the T level, there is the Construction Skills Fund, funded by the CITB, which aims to set up training hubs across the country. The funding supports live projects, providing to onsite experience to nearly 20,000 participants. Major contractors Wilmott Dixon, Balfour Beatty, and Morgan Sindall are just some of the major players in this scheme and have directly hired individuals for various roles.

Opportunities to help mitigate the skills shortage ​

The skills shortage is also impacting the consultancy sector of the industry. There is still a large proportion of the workforce that is aging, and the industry needs to do more to attract young talent.

The consultancy workforce has still seen the effects of Brexit and Covid 19; the exodus of EU workers and ‘big resignation’ of the older workforce after the pandemic. This is compounded by the globalisation of the construction industry and the attractiveness of international markets such as Australia, New Zealand, and USA in drawing talent away from UK consultants.

To address this, the Colliers Bristol Project and Building Consultancy team are actively contributing to rebalancing the scales by having over 25% of the team composed of apprentices. Two of them are pursuing their education at the University College of Estate Management, while the other two are enrolled in the local University of the West of England. ​

Additionally, there are a further two apprentices within the Bristol office that are part of the larger Colliers ‘Emerging Talent’ programme’. ​

Applicants are being encouraged for the next intake in 2024 and applications will open in autumn 2024.

In conclusion, there is a growing recognition within the industry of the challenges we currently face, particularly in the short to medium term, concerning the skills shortage. Initiatives like the government's T level and CITB Construction Skills Fund serve as positive starting points. However, it is now the responsibility of companies to drive their own programs, such as Colliers' Emerging Talent, to address these challenges.

The industry must adopt a cohesive and collaborative approach to: Attract skilled workers already working elsewhere in the industry

Alex Vacher​
Director | Cost Management

Alex is ​ director and Chartered Quantity Surveyor with over 10 years of industry experience in Cost Management and Quantity Surveying.

Alex is passionate about delivering excellent commercial advice for our clients for them to obtain best value. His focus is on how he can apply commercial acumen to add value for our clients through all stages of the project.

As the head of the Cost Management team at our Bristol office, Alex assumes the responsibility of leading a highly skilled and dedicated team, ensuring the delivery of outstanding results for our esteemed clientele.