BUSINESS
Exploring empty business rates
It was the Budget of 2007 that mandated 100% rates on empty business premises, which meant that from April 2008 landlords unable to attract a tenant faced not only the loss of rental income but were also required to pay the full rate charge on the property. Martin Jordan looks at some reliefs landlords might be able to gain.
he empty business rate charge has hit property owners right across England and Wales, some of whom have taken to demolishing their property rather than be left with assets that were bleeding cash. Smaller properties were excluded from the charge during 2009/10 and 2010/11 but from April 2011 only very small properties below the minimum rateable value of £2,600 are now exempt.
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Many ratepayers appeal their rateable value but there are other opportunities to mitigate exposure to empty rates. For example, it is worth reviewing whether there are any circumstances at your property which might provide an exemption, for example where the condition of a building might give rise to health and safety issues. Special rules may also apply to new or refurbished property that has not been occupied since work completed, and we have recently won a case in the Lands Tribunal cancelling rate charges on new office units.
There’s a further angle to be explored when a property becomes vacant. There is an initial exemption period before
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empty rates become due, three months for shops and offices and six months for industrial buildings. Once empty rates have become payable, any further occupation of six weeks or more will attract a further exemption period when the occupation ceases. Owners can therefore look for short term occupiers to make use of their property for a minimum of 6 weeks in order to obtain the benefit of a further exemption period. For example, a vacant shop might be used for the display of goods by a local business, for promotion purposes. For a further exemption to apply, there should be actual occupation of the premises which can be shown to be of benefit to the user.
Other exemptions from empty rates apply to listed buildings and property owned by a company in liquidation/ administration or a person in bankruptcy.
There is no automatic relief for partly vacant property, but councils do have discretion to award relief where only part of a property is in use for a short time. This can apply where businesses take some time to grow into a new property or phase down operations before final closure. It might also be available when there is an internal re-organisation of staff or a refurbishment programme. Councils have their own policies on the award of this relief but its availability is often missed by occupiers and it can provide substantial savings.
As you can imagine, there is significant pressure on the coalition government to abolish or reduce this rate, but there is no indication that will happen in the short term. In the meantime, owners should be looking for ways to reduce their liability.
Source: Martin Jordan Senior Manager at PricewaterhouseCoopers
martin.g.jordan@
uk.pwc.com
www.businessfi
rstmagazine.co.uk
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