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Changes to Rate Relief for Empty Property
 If
you are a shop/office landlord, or have
empty premises, you should be aware of the
proposed changes to rate relief on empty
property. As part of a drive by the
government to increase regeneration and
boost rates of occupancy; buildings will no
longer qualify for half rates after the
first three months (six months for factories
and warehouses) of being empty.
Speaking at the introduction of the Bill to
parliament Treasury Minister Ed Balls
claimed the move: "provides incentives for
owners, developers and tenants to produce
the right kind of property, and to take
advantage of efficiencies in the use of land
and property that will increase supply and
drive down costs for their consumers."
However, retailers organisation the British
Retail Consortium (BRC) claim that the
government is either failing to understand
the property market, or is deliberately
making a grab for cash under the smokescreen
of a regeneration incentive.
The retailers' organisation says properties
are empty because they are not wanted at
that time or place. New tax burdens will not
change that.
The BRC believes it will put developers off
risky projects where property may take time
to fill, undermining investment in deprived
communities most in need of regeneration.
BRC Director General Kevin Hawkins said:
"Either the Government fundamentally
misunderstands the mechanics of the property
market or it is trying to hide a bare-faced
cash grab behind a regeneration smokescreen.
The logic doesn't hang together. No one
gains by keeping property empty. It's
unoccupied because there isn't the demand
for it at that time and place. Piling on
taxes will not conjure up new tenants or
drive down rents but it will weaken the
prospects for local regeneration and fill
the treasury coffers.
"Any retailer's Property Director will tell
you three months is rarely enough to
organize a new occupier even when one is
lined up and desperate to get in. The
problem is even worse in undesirable areas
and certainly developers will be put off
risky projects. Why would they take a chance
on speculative building and face big tax
demands if they can't find a tenant?
"This policy flies in the face of the
Government's stated aim of promoting
regeneration. Deprived communities will be
the biggest losers."
They also believe the proposal is at odds
with the new, Government-backed, Leasing
Code of Practice, meant to promote flexible
leases. Owners will look to push up rents
and extend lease terms to reduce their risk
from big tax bills when property is empty.
There is also a danger that occupiers or
landlords of vacant property may once again
be tempted to dismantle buildings to avoid
the tax. This would produce, rather than
reduce, dereliction and blight.
If you have a building that is currently
empty, or could be in the near future, you
should keep a close eye on the proposed
changes.
For more information on taxation issues
visit our Accounting portal here.
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