CFIp16-17_Empty rate.qxd 27/2/09 11:28 Page 27
Empty rate tax | 17
security available in addition to the property
that is to be knocked down!
In each of the above situations the usual There may still be opportunities for
prerequisites for a bridging transaction will
apply, such as having an established exit in
place. Provided these can be satisfied and the brokers to assist those who have
security offered is appropriate then short
term lenders can and will consider advances
for either of these purposes. taken the decision to knock down
Lease or sell
The second issue which brokers should be their properties
aware of is the effect that the empty rates
tax is having on the willingness of lenders
to advance funds to businesses that need to For example, a recent case we looked at rate hike is certainly perplexing. Nevertheless,
use their premises as security. As stated involved an industrial site of 84,700 square it appears that empty rates bills are here to
above, the empty rates bill on a large site feet. We calculated that this had the potential stay and brokers need to be aware that lenders
can be considerable and if a lender is forced to face the client, or a lender in a possession who are still in the market will be taking
to take possession of a commercial property situation, with an empty rates bill of £126,995 them into account when looking at large
from a beleaguered owner then they will per annum! Additionally, as a lender we deals.
need to lease or sell it in a market where would have to assume that if a possession sit- It could thus be worthwhile for brokers to
values and occupier demand are both uation arose the client is unlikely to have paid go the extra yard when establishing the viabil-
declining, or become liable for the empty their empty rates tax, thereby passing the ity of a business or site prior to approaching a
rates tax themselves! In the current climate arrears on to us. lender. Whether or not extra evidence and
this can be a huge disincentive to lend documentation will actually be required is
against commercial property and the larger Here to stay likely to depend upon the details of the case,
the property, the greater the potential In a buoyant market the problem outlined but in a market where many lenders are
liability. This means that from a lender's above would be less pronounced, but given "cherry-picking" deals, being able to allay any
perspective deals which are otherwise the current climate and the government's concerns they might have regarding empty
attractive can become unworkable when apparent zeal to encourage business lending rates could help to secure a better deal for
the possibility of an empty rates bill is fac- its failure to pronounce moratoriums on the your clients and bring cases to completion
tored in. empty rates tax and the proposed 5 per cent more swiftly.
www.mortgageintroducer.com March 2009 Commercial finance Introducer
Page 1  |  Page 2  |  Page 3  |  Page 4  |  Page 5  |  Page 6  |  Page 7  |  Page 8  |  Page 9  |  Page 10  |  Page 11  |  Page 12  |  Page 13  |  Page 14  |  Page 15  |  Page 16  |  Page 17  |  Page 18  |  Page 19  |  Page 20  |  Page 21  |  Page 22  |  Page 23  |  Page 24  |  Page 25  |  Page 26  |  Page 27  |  Page 28  |  Page 29  |  Page 30  |  Page 31  |  Page 32  |  Page 33  |  Page 34  |  Page 35  |  Page 36  |  Page 37  |  Page 38  |  Page 39  |  Page 40  |  Page 41  |  Page 42  |  Page 43  |  Page 44  |  Page 45  |  Page 46  |  Page 47  |  Page 48  |  Page 49  |  Page 50  |  Page 51  |  Page 52  |  Page 53  |  Page 54  |  Page 55  |  Page 56  |  Page 57