|
The Rating (Empty Properties) Act 2007 came into force on 19th July 2007 and took effect on 1st April 2008. It removed business rates relief for most unoccupied properties. Prior to April 2008 business rates did not have to be paid on empty properties for 3 months for most commercial properties and 50% of the rate thereafter. Empty industrial property was exempt from liability all the while it remained empty.
As from 1st April 2008 an empty commercial property will pay full business rates after 3 months and industrial units and warehousing will pay full business rates after 6 months. Charities are now subject to 100% relief as are Community Amateur Sports Clubs, Listed Buildings and buildings of companies in liquidation, receivership or administration.
In the 2008 Pre-Budget Report small business premises with a rateable value up to £15,000 as of 1st April 2009 would pay 50% Business Rates and if empty would be exempt.
In the 2009 Pre-Budget Report the rateable value was increased to £18,000 and the empty property relief was extended for a further year. The change in the threshold is as a consequence of the 2010 business rates revaluation. In Greater London the small business rates relief will increase from £21,500 to £25,500.
Some small rural businesses also have a 50% exemption. The Rateable Values for public houses and petrol stations will increase from £10,000 to £12,500. For other premises the increase will be from £7,000 to £8,500. Billing authorities do have discretion to waive rates if the Rateable Value after 1st April 2010 is less than £16,500.
The Non-Domestic Rating (Unoccupied Property) (England) (Amendment) Regulations 2010 bring the 2010 budget changes into effect on 1st April 2010. One consequence of the 2010 Regulations is the threshold will reduce to £2,600 for the year beginning after 1st April 2011 unless the current threshold is maintained for a further year in the next budget.
Billing Authorities will also allow changes to the structure of a building to make it unmarketable and therefore avoid full business rates. Currently if business premises are not capable of occupation because they are in poor condition and cannot be economically repaired then the premises can be taken out of the rating list. However, anti-avoidance legislation has been introduced by the Government so that if work is done to an empty property by say removing the roof or if the property is damaged for the purpose of avoiding rates then the Billing Authority will value the building as if the damage or work had not occurred.
Landlords should be careful when considering forfeiture of a lease or dealing with tenants who wish to surrender their leases. If there is no tenant ready and willing to let the premises to then Landlords must consider how much in business rates they will have to pay all the while premises remain empty. Landlords may find themselves either reducing rents or otherwise being more flexible towards defaulting tenants until market conditions improve.
|
