IN an attempt to boost the economy and development, the government has introduced changes to rates payable on new commercial properties which are vacant.
Generally, empty property rates are not payable on commercial property if the property has been unoccupied for 3 months for non-industrial properties or 6 months for industrial properties.
IN an attempt to boost the economy and development, the government has introduced changes to rates payable on new commercial properties which are vacant.
Generally, empty property rates are not payable on commercial property if the property has been unoccupied for 3 months for non-industrial properties or 6 months for industrial properties. However, for new commercial properties completed between 1 October 2013 and 30 September 2016, the time frame that the exemption applies to has been extended by up to 15 months.
The extension applies to all unoccupied commercial properties wholly or mainly comprised of qualifying new structures (i.e. foundations, permanent roofs and/or walls). The exemption will apply for 18 months following completion of construction (whether it is an industrial property or not). However, the relief is subject to a cap under European law of €200,000 per organisation over a 3 year period which equates to a maximum relief of approximately £55,500 per year for each organisation.
Lucy Lord, a Partner in the Commercial Property department at Howes Percival LLP comments:
“The exemption gives investors and developers room to breathe as it reduces the risk of liability for rates on an empty property while trying to find a buyer. The relief is also attached to the property rather than the owner in the event of a change in ownership, which is an added benefit and provides further flexibility.”
Although it is hoped that this incentive will increase new construction, it may also reduce the demand for existing properties. As the exemption only applies to new buildings, the owners and landlords of existing commercial properties may feel disgruntled. Some may argue that the exemption should be extended to apply to refurbishments or renovations of existing commercial properties. However, this relief is also available to existing properties which are split, merged or changed to make the property wholly or mainly comprising of new structures and this may provide some comfort to owners of existing properties.
This extension by the government has been warmly welcomed by investors, developers and others within the construction sector. The government will keep this matter under review but it is hoped that this incentive will show a visible boost to development of commercial properties.
To discuss this or any other property matters, contact Lucy Lord, a Partner in the Commercial Property team at Howes Percival LLP on 01604 230400.