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IS YOUR RATES BILL ABOUT TO INCREASE? The current regime Under the current regime, no rates are payable for the first three months when a property first becomes empty and unoccupied. After the initial three months, Empty Property Rates become payable at the rate of 50% of the full occupied charge. Industrial properties and those with a low rateable value benefit from an exemption that allows them to indefinitely receive 100% relief for as long as the property remains empty and unoccupied. Why change? The Government's stated reason for the reforms is to encourage regeneration. They believe that it will encourage the use of empty property, increasing the supply of business property and therefore reducing business rents. In the industry there are concerns that the reality will be: • increased services charges to recover the rates liability • reduction in share prices for those companies with large property holdings • increased rents and extended lease terms to reduce the landlord's risk from large tax bills when the property is empty • potential for owners to deliberately damage their property in order to remove it from the ratings list (although the government has introduced anti-avoidance legislation to prevent this)
What should you do? • owners of empty buildings should consider appealing now against their property's rateable value. • landlords should ensure that their leases adequately protect them from liability for rates of property left empty by their tenants. • owners of empty properties should consider whether now is a good time to sell and thereby avoid liability for rates on buildings that are not producing any income.
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