Increase in threshold for business rates on empty properties
Recent Government legislation (The Rating (Empty Properties) Act 2007 (The Rating Act) removed business rates relief for most unoccupied properties with effect from 1 April 2008. Most commercial properties now have only 3 months of 100% business rates relief with industrial and warehouse premises enjoying 100% relief for the first six months of vacancy. After the initial period of vacancy, full business rates are payable by the property owner, bringing the rates liability to the same level as occupied properties.
The Rating Act has been widely criticised by the property industry as an additional strain on businesses at a time of economic contraction - indeed, the Royal Institute of Chartered Surveyors has described the Rating Act as "purely a revenue raising exercise with no thought of the potential consequences". In the 2008 Pre-Budget report, the Government announced plans to temporarily increase the rating threshold above which an empty property becomes liable for business rates.
The Government has now introduced new regulations effective from 1 April 2009, with the effect that empty properties with a rateable value of less than £15,000 will be exempt from business rates. According to Government estimates, this revision will exempt 70% of empty properties from business rates.
However, the Government is insistent that, in the long term, it is proper to charge rates on empty properties, as this acts as an incentive to property owners to re-let and re-use empty property. The proposal in the Pre-Budget Report was that this rating revision would only be available for a year and there are no current plans to permanently reverse the effects of the Rating Act.
If you have any queries relating to these changes, please contact Paul Duggan from the Metcalfes property team on 0117 929 0451 or email pduggan@metcalfes.co.uk
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