The past two years have been challenging for landlords and property owners, particularly those landlords with commercial and industrial properties within their portfolio.
Lichfield, as many other areas of the country, has seen an increase in the number of empty properties, particularly in the last few months.
From 1st April 2011 times will be increasingly challenging for property owners due to changes in the exemption rules for empty property business rates.
Commenting on this Laura Raby, commercial property solicitor at Ansons said: “Up to 31st March this year, property owners who have vacant premises with a rateable value of £18,000 or less, do not have to pay business rates.
“However, from 1st April 2011, the Government will effectively remove the current empty rates exemption by reducing the rateable value from £18,000 to just £2,600. There will be an initial exemption of 3 months for non-industrial premises or 6 months for industrial premises.”
The aim of these cuts is to encourage property owners to let empty properties sooner rather than later. The Government claims that these cuts will save the Exchequer £400m in 2011/2012.
The British Property Federation has warned that the Government's decision to cut empty property rates relief will be a”further blow” to the industry.
The Royal Institution of Chartered Surveyors has suggested other methods which could be introduced to try to alleviate the immediate effect on property owners with empty premises.
The 1st April 2010 Valuation List is prepared on the basis of market rents on 1st April 2008. Of course, two years ago market rents were higher than at present, and therefore in many instances the current rateable values actually exceed the current market rent.
“There is an appeal procedure to rateable values, but you must remember that you are challenging the rateable value based on market rents on 1st April 2008, and therefore current evidence is extremely difficult to use. It must be remembered that Local Authorities are merely collection agencies for Central Government and it is the Valuation Office to which appeals are made,” said Miss Raby.
The reduction in the rating exemption will certainly be beneficial to some tenants, as landlords will be looking to mitigate their rates liability by offering attractive deals.
Andrew Price, Chartered Surveyor at Kingston Commercial Property Consultants said: “One way in which landlords can avoid business rates liability is intermittent occupation whereby a landlord lets a property on a casual basis for at least six weeks. If a property is occupied for six weeks or more, it can then be empty for the three month or six month period before the owner will again become liable for business rates, subject to the type of property. If the owner repeated this process its liability could potentially be deferred indefinitely but it is important that the short-term letting is documented in writing in order to avoid granting the tenant security of tenure. However, the Government has its concerns about this avoidance tactic and are considering extending the six week period.”