Business rates blow to landlords
If you own an empty business property, from 1 April 2008 you will start to pay full business rates after just three months of the vacancy unless the property is classed as industrial premises or warehousing, in which case the rates-free period will be six months. After this initial three or six-month period, full business rates will apply. Empty properties held by charities will remain exempt from rates.
The Royal Institution of Chartered Surveyors believes that the removal of the relief will cost the commercial property sector more than £1 billion a year. At present, offices and retail premises are eligible for 100% relief for the first three months followed by 50% relief thereafter. Empty industrial premises are given 100% relief indefinitely.
The changes are aimed at increasing the supply of commercial property for rent and to boost the number of brownfield sites for development. The problem, as every property owner knows, is that finding the right tenant can often take much longer than three or six months. As well as having to pay higher rates while the property is empty, owners might then have to accept a lower rent to get the property occupied.
The government is also looking at other aspects of business rates. In particular, business rates may also be extended to land that is derelict or is vacant having previously been developed.