1st Apr 2008
Changes to empty property reliefs were introduced, effective form 1 April 2008, as an incentive to encourage owners to bring empty properties back into productive use. The Government believes that businesses that rent premises will particularly benefit though an increase in availability, thereby reducing rents and increasing the competitiveness of the UK. It has been estimated that empty property relief cost £1.3bn in tax revenue in 2007/2008.
Up to 1 April 2008, the liable party of an empty commercial property (retail outlet/office building) could apply and receive 100% relief from paying non-domestic business rates for the first three months and, after this period, the entitlement reduced to 50% pending the premises becoming occupied. Industrial buildings (factories/warehouses), listed buildings and small properties with a rateable value of less than £2200, paid no property rates for unoccupied premises.
The change in legislation means that a commercial property that has been empty for more than three months or, in the case of industrial property for more than six months, will no longer receive relief from business rates; the liable party will be legally responsible to pay the full bill whether the building is occupied or not. The only deemed commercial property that are exempt from parts of this new ruling are those with a rateable value under £2200, listed buildings, charities, community amateur sports clubs and liable parties in administration.
The commercial industry has expressed concern that a further burden of taxation is being placed on landlords who are unfortunate enough to be experiencing rental void periods. This could, it is claimed, have an adverse impact on regeneration developers as there is often a genuine need for developers to hold vacant property assets for significant periods of time during the site assembly process. The potential exists that a more prudent and cost effective solution for the developer may be simply to demolish properties with an adverse impact on the area and potential to delay development. There is also a risk that speculative development will not occur.
