Business Rates -
Empty Property Rate Relief
The impact of The Rating (Empty Properties) Act 2007
From 1 April 2008, The Rating (Empty Properties) Act 2007 has removed long term
business rates relief for most unoccupied properties. The Government has
reformed empty property relief, in order to provide a strong incentive to bring
empty property back into use. They believe that this will increase the supply
of premises to let, and so reduce business rents and improve competitiveness.
Industrial and warehouse premises now have 100% business rates relief for only the
first six months of vacancy. Most other commercial premises, including shops and
offices have only three months of 100% business rates relief. After the initial period
of vacancy, full business rates are payable, bringing the rates liability to the same
level as occupied properties.
There are several points that should be noted:
1. If the property is let out on a short term basis for a period of not less
than six weeks then on expiry of the letting a new three or six month
holiday may be claimed. There appears to be no limit to how many
times this can be done although difficulties may arise if only part
of the vacant building is let.
2. Landlords of commercial property will henceforth have to be very
mindful of the liability to rates when considering whether or not
to forfeit a lease or to accept a surrender particularly in a declining
market. Even if their tenant is insolvent. If the tenant is a company
in administration or liquidation and the building is unoccupied then
there is an exemption for rates. Hence if there is no likelihood
of re-letting the property a Landlord may well decline to forfeit
or to accept a surrender as only the insolvent tenant can claim
the exemption from rates that is not available to the Landlord.
The Pre-Budget Report 2008- November 2008
The Government has announced that it is temporarily increasing the threshold
at which an empty property becomes liable for business rates. From April 2009
until March 2010, empty properties with a rateable value of less than £15,000 will
be exempt from business rates.
According to the Government, this one year lower value property relief is aimed
at helping small businesses manage short term pressures due to difficult market
conditions and the prevailing economic climate.
If you would like further information on the content of this newsletter please
contact Michael Collins on 0207 404 0606 or mcollins@gdlaw.co.uk.
This guide is for general information and interest and should not be relied upon
as providing specific legal advice.
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