Empty property rates relief extension welcomed, but still falls too short
10 December 2009
In his Pre Budget Report yesterday, The Chancellor of the Exchequer Alistair Darling agreed to extend the relief on empty property rates for commercial properties in England for a further 12 months.
In his announcement he stated that vacant properties with a rateable value below £18,000 for 2010/2011 would be exempt from paying the tax; up from £15,000 in the current year.
It was in the 2007 Budget when the tax was first introduced, and it is generally considered by many in the property industry as being one of the most unwelcome and unpopular taxes of recent times. Before its introduction, owners of commercial properties enjoyed a significantly lower, and in some cases total exemption from, rating liability when their properties were vacant.
The original intention behind the tax was to encourage landlords to let empty buildings, thereby stimulating regeneration. But, the opposite has occurred. As a result of the economic downturn and the almost total disappearance of tenant demand, a number of landlords have resorted to the demolition of vacant buildings in order to avoid the empty rate liability.
Oliver Turner, Associate at Ryden, said: “Whilst yesterday’s announcement is welcome news, it still falls well short of industry calls for the complete abolishment of empty property rates. Furthermore Mr Darling confirmed that the empty rate relief he announced is only temporary, with the Government remaining committed to charging rates on empty properties to encourage re-letting. The news is also of little comfort to those with vacant properties with a rateable value above £18,000, who do not benefit.”
He added: “With the 2010 rating revaluation just around the corner, and properties being valued on the basis of values prior to the economic downturn, it is likely that this discomfort is set to increase. The upshot of these circumstances is that there has never been a better time to look in detail at rating liabilities in general, and ways in which these can be minimised.”
