Empty Threat – Business Rates charge on empty properties.

Business rates, already a large item on the expenditure account is set to become even greater.  In some instances rates will appear for the first time even where the property is not occupied. This can seriously affect business profitability and competitiveness. 

Since our last newsletter in March which was also about business rates, concern has grown over the proposals for forward rates legislation introduced by Gordon Brown in the last budget.  This is now very advanced in the Parliamentary process and is due to become law very soon.
 
What exactly is this?

Shops and offices and other non industrial premises 
From the 1 April 2008 full rates will be charged after a three months void period.  Currently 50% rates are charged after three months.

Industrial premises
From the 1 April 2008 full rates are to be charged after a six months void period.  Currently there are no rates charged whatever length of time premises are unoccupied.

The Government sees this as a ploy to bring forward the supply of property to be redeveloped and occupied (as well as a source of Revenue!).  This is on the basis that it will be too expensive to keep the properties empty. 

The property industry sees this as increasing the cost of holding vacant sites and reducing incentives to invest in commercial property.  Far from increasing the supply of properties to let it will reduce it especially in secondary and marginally locations where occupiers and owners cannot afford to hold empty properties.

The impact will be greater on industrial property in secondary locations, these are likely to be vandalised in such a way as to render them incapable of being rated in the first place.

The RICS is lobbying the Government for general consultation on release and exemptions, delaying implementation for a year and returning empty property relief in disadvantaged areas. 

For further details see the link below. 

http://www.rics.org/AboutRICS/RICSstructureandgovernance/RICSpolicy
/ratingemptypropertiesbill.htm

Void rate relief is part of the consideration of total rate liability but this will mean for example the level of industrial assessments will now have to be considered in more detail even when these are empty.  We as Chartered Valuation Surveyors are able to give such advice with the combined experience of over 20 years in the Valuation Office (the business rates agency) and private practice.

----------------------------------------------------------------------------------------
Log on for more information and advice:  www.rdn.co.uk 
----------------------------------------------------------------------------------------

This is part of a regular series of topical articles provided exclusively by RDN Chartered Surveyors. Past newsletters can be seen at  www.rdn.co.uk/newsroom . If you would like further information or add your comments please reply to this e-mail of contact Roger Nelson 0800 902 0466.