Paul Taylor, an Partner in the Commercial Property Unit, offers guidance for landlords on how to try and minimise their exposure to empty property rates
In April of last year, legislative changes were introduced to the level of business rates payable in respect of unoccupied commercial buildings (‘empty rates’) with the aim of encouraging landlords to re-let quickly at a competitive rent. The Rating (Empty Properties) Act 2007 came in to force on 19 July 2007 and since 1 April 2008, full business rates have been chargeable on all vacant commercial properties after an initial concessionary period of six months in respect of warehouses and industrial buildings and three months in respect of retail and office premises.
There are some exemptions from the new system (for example listed buildings do not attract a charge to tax) but generally business rates will now be payable on all vacant commercial buildings once the relevant concessionary period has expired, bringing the liability for empty rates to the same level as that for occupied properties.
The current economic climate has led to an increasing number of landlords being faced with a tax on unused assets where they are unable to re-let their empty properties within the initial rate-free void period. Therefore, it is vital that landlords do all that they can to shelter themselves from the liability to pay business rates on vacant buildings for as long as possible, for example, by ensuring that the terms of any lease allow them to take the full benefit of any available empty rates relief when that lease comes to an end.
Set out below are some of the ways in which landlords can seek to limit their exposure to empty rates:
The examples given above briefly outline some of the options available to commercial landlords to help to ease the impact of the new ratings regime.
For further information contact Paul Taylor on 0191 232 8345 or email firstname.lastname@example.org
Please note: This article is not legal advice; it is intended to provide information of general interest about current legal issues. Please contact us to discuss how the contents of the article may affect you.