What is the empty rates legislation?
For decades our government has helped struggling businesses through empty property rates relief by allowing them to pay lower business rates on empty commercial properties. For shops and offices this meant three months of 100 per cent relief followed by 50 per cent thereafter. Owners of empty factories and warehouses were fully exempt.
However, from April 2008 the government cancelled relief from business rates on empty non-domestic buildings in the Rating (Empty Properties) Act 2007 . As a result, non-industrial property is exempt from business rates for three months and industrial property for six months, but after this short time period all commercial premises must pay 100 per cent business rates.
In the 2008 Pre Budget Report, the Chancellor, Alistair Darling, announced a temporary, one year, increase in the threshold exempting empty commercial properties up to £15,000 rateable value. The government claimed this would help 70 per cent of properties, however the exemption only helps 13 per cent of total business rate payers*.
The goverment's stated aim of forcing a fall in rents to benefit tenants has not worked. By encouraging the demolition of older buildings and discouraging development, the legislation is limiting the amount of space available - in the long term this restrained supply can only lead to an increase in rents.
Quick Facts:
- The changes introduced in April 2008 include:
- increased empty rate liability from 50 per cent to 100 for non-industrial property, such as shops and offices, that has been empty for more than three months
- increased empty rate liability from zero to 100 per cent for industrial and warehouse properties after a six month grace period
- In the Pre Budget Report on 24 November 2008, the Chancellor announced an empty rates holiday for the 09/10 tax year for properties with a rateable value of less than £15,000.
*Department for Communities and Local Government, Business Rate Supplements White Paper, page 31.
British Property Federation's Overview Briefing Note
Her Majesty's Government's Rating (Empty Properties) Act 2007
Local Government Finance Act 1988, section 46 (amended by Rating (Empty Properties) Act 2007)
CLG, Government Consultation: Modernising Empty Property Relief
CLG, Government Impact Assessment - The Rating (Empty Properties) Bill
