Rating liability on empty properties has changed. 

From 1 April 2008, 100% rates are payable on commercial property that has been unoccupied for more than 3 months and on industrial and distribution property that has been unoccupied for more than 6 months.

Find out how Accurates can save you money at www.Accurates.co.uk or call 0121 265 7588.

You’re not the only one keeping an eye on your empty property.

The government agreed to drop the introduction of anti-avoidance measures from its recent shake-up of empty property rate relief. But that doesn’t mean they aren’t watching.

In March 08, Local Government Minister John Healey vowed to take a tough line on the deliberate dereliction of empty properties, warning that the impact of the new regulations would be closely monitored. He also wrote to every billing authority, urging them to enforce existing powers to tackle rate avoidance.

Do you know where you stand?

With the government pledging to remain vigilant for what it perceives as abuse, it’s more important than ever to access the right guidance on empty rates. Accurates can offer proactive, considered advice on minimising empty rates liabilities now and in the future.

Accurates can help. With a legal consultant now on board and a suite of solutions to help, Accurates can offer proactive advice on minimising empty rates liabilities now and in the future. And we work on a risk-free performance fee basis, so there are no upfront or time-based charges.

Visit www.Accurates.co.uk

To read more about the Government's stance on empty rates visit their communities and local government website.

Background to the empty rates changes

The Government carried out a consultation prior to changing the empty rates rules. Colliers CRE were invited to respond and many of you sent in your comments for inclusion in our report. We made a strong case against the original plans and effected some change.

Empty Properties. You spoke, the Government listened. 
A short while ago we sent in a detailed response to the Government’s proposal to modernise empty property relief.

We thought it was unfair and we said so quite clearly. Your feedback was crucial in creating the document. This week, sooner than expected, we received our reply.

Their response specifically referred to the document Colliers CRE submitted and the questions it raised.

As a result, although the 100% rate charge on empty properties will come in from 1 April 2008, the Government will:
• Defer making anti-avoidance regulations unless/until there is proof of abuse.
• Retain the 6 week occupation rule before re-qualifying for a further 3 or 6 month exemption period.

In addition they will:
• Maintain the exemption for listed buildings from Empty Rates.
• Introduce a permanent exemption for empty properties owned by companies in administration.

Read our Summary of Consultation Replies and Government Response (December 2007).

For the detailed response, and to find out how we can help plan the management of your empty rate liabilities within the new legislation, just contact us on 0121 265 7588.

Modernising empty property relief
For advice on how best to minimise the effects of the new legislation on your business contact one of our specialists listed to the left.

For more about reclaiming overpaid business rates visit our historical audit company at www.accurates.eu.

Iniquitous, unfair, hurried and badly thought through
That was our considered opinion on the changes to commercial rates on empty properties. And we were not alone, owners, occupiers, developers and council staff all agreed with us.

We'd like to thank everyone who sent us their opinions, we included them in our presentation to the Government on 1 October 2007.

The enabling legislation has already been passed but by responding we hoped to ensure the consultation was not just a rubber stamp.

Read our (pdf file) report to the Government (October 07).
See also, the (pdf file) Government's consultation paper (July 07).

Also on this page

Existing rating rules for unoccupied properties
Summary of the changes effective April 2008*
A selection of your responses

Existing rating rules for unoccupied properties
No rates liability for first 3 months, providing the whole property is continuously unoccupied, followed by 50% liability thereafter for offices and retail buildings.

Exemptions provided for;

• Qualifying industrial hereditaments (factories, non-retail warehouses etc)
• Listed buildings
• Prohibition on occupation
• Insolvency
• Rateable Value of less than £2,200.

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Summary of the changes effective April 2008*
100% ratings liability after 3 months for unoccupied commercial properties, and after 6 months for unoccupied industrial and warehouse hereditaments. Current exemptions for listed buildings are under review.

Exemptions only provided for charities and community amateur sports clubs.

Measures have been added “to deal with steps that owners might take (or omit to take) in an attempt to avoid unoccupied property rates through causing or allowing the state of their property to change. Such regulations may provide that the state of any property forming part of an unoccupied hereditament shall be deemed not to have changed since before any prescribed event or as the result of an act or omission by or on behalf of a prescribed person.”

*Nb. The rules allow the anti-avoidence measures to be brought forward and applied to this financial year, should the Government wish it.

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A selection of your replies
Read all the replies in our (pdf file) report to the Government.

“No retailer or occupier will leave property vacant - it does not make sense. All the new empty rates proposals will do is make the costs rise for vacant space - any space vacant is vacant for a reason - it cannot be let!”

“From a developer's point of view this will kill speculative development dead in its tracks as we will be unable to afford the risk of empty buildings with their financial holding costs as well as a rates liability. This in turn will lead to a shortage of property available and therefore an increase in rents/prices.”

“No owner of property or developer keeps property empty except in very unusual circumstances. Our raison d’etre is to get property producing income or capital receipts ASAP. This is the same for any business, whether tenant or owner occupier.”

“Whoever left property vacant deliberately (other than the fabled Harry Hyams at Centre Point)? The Government is deluded.”

“The measure simply doesn’t understand the structure of the marketplace. Tenants have lease commitments and want to move, to upgrade, to expand, and to take on more people into employment. To add to the cost of releasing vacated space will reduce their ability to do this, as vacated space will often have ongoing lease liabilities, which means additional empty rates will fall to them. It simply is not the norm that a tenant moves out and a new one straight in. There is a void period for re-letting, marketing and fit-out.”

“The levying of empty rates on some listed buildings which cannot not be made DDA compliant, and are therefore unlettable, is completely unjust.”

“The imposition of empty rates will hamper the economic case for speculative development projects, particularly in weaker periods of the market cycle, thus slowing recovery process. This could damage areas both at the leading edge of high value economic activity (eg City of London) and those in need of regeneration where speculative development can lead to new economic activity. The effect would be to reduce the amount of good quality new space delivered to the market. This could reflect badly on the UK’s competitive position and reduce its ability to present itself as a market leader.”

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