Increased rates relief for commercial property
From 1st April 2008 the business rates relief on commercial property was largely withdrawn meaning that full business rates were chargeable on empty commercial properties, with industrial and warehouse properties benefiting from 100% relief for the first 6 months of vacancy and other commercial properties receiving 100% relief for only the first 3 months. Following the initial exemption period full business rates would be payable even if a tenant could not be found.
The move was widely criticised at the time and subsequently for adding to the burden of commercial property owners at a time when many were struggling. There have even been claims that some properties were being demolished as owners believed that this was a cheaper alternative to paying the tax and that developers were shelving developments through the fear of being exposed to taxes on properties they were unable to sell.
However, from April 2009 until March 2010, the threshold at which properties become liable for business rates will be temporarily increased so that only properties with a rateable value in excess of £15,000.00 will be liable for business rates.
The Government estimates that this temporary change will exempt 70% of vacant commercial properties from business rates, albeit only until March 2010, in a move which has been welcomed.
The Government, however, is of the opinion, however, that in the long term business rates should be charged on empty commercial properties, as this would increase incentives to re-let and re-use empty property.
This article was written by Mark Kelly, Conveyancing Team.