Hotels set to benefit most in changed rating system
Hotels could see their rates bills tumble by as much as 60 per cent next year because of the Government's decision to revalue properties on a yearly basis as opposed to the three years used in the past, according to Chesterton Petty.
Other sectors, including luxury residential, retail, office and industrial could see rates fall anywhere from 6.5 per cent in the case of luxury residential to 21 per cent for retail.
The Government announced last week that it would move to yearly valuation using October 1 this year as the basis for assessment.
At the moment, rates are based on a three-year period, calculated on income generated by a property as of July 1, 1996. They would have been due for recalculation on July 1, next year.
The Government was forced to rethink property valuation by the dramatic downturn in all sectors of the property market and worsening recession in Hong Kong.
'By reassessing annually, rateable values should in future more accurately reflect the economic circumstances affecting ratepayers' premises at the time he makes the rate payment,' said Simon Lynch, valuation manager with Chesterton Petty.
According to Chesterton Petty's figures, if the Government sticks to its 4.5 per cent levy, luxury homeowners can expect a 6.5 per cent cut in rates next year.
However, this is still considerably less than the 25-50 per cent cut in rates which property surveyors expect for the mass residential market.
The hotel sector is expected to be the biggest beneficiary as rates for this sector are calculated on the amount of income generated by a hotel.
Considering the massive downturn in tourist traffic since the handover last year and price cutting by hotels, rates would fall substantially, said Chesterton Petty.
Other sectors such as retail, where rates also were based on generated rental income, probably would benefit by as much as a 21 per cent cut in rates.
The office sector would see rates decline by up to 14 per cent next year. Cinemas and theatres would benefit little from the change, with rates dropping by only 5 per cent.
However, Chesterton Petty said that luxury homeowners could be in for a surprise should the Government decide to increase the charge from 4.5 per cent to 5 per cent of rateable values. Given an increase in the charge ratio, luxury home owners could face a 4.1 per cent increase in rates next year.