From 1 April 2008 unoccupied commercial property in England and Wales will become liable for full business rates following expiration of a concessionary period – six months for factories and warehouses, three months for everything else. If the premises have been vacant for the concessionary period prior to 1 April, full rates will become payable on 1 April 2008.
Currently no business rates are payable on empty industrial buildings and 50 per cent. business rates are payable on empty commercial space after an initial three month concessionary period.
The Government has introduced the new regulations in order to encourage landlords to let empty space, to encourage tenants to assign leasehold properties they no longer occupy and, by increasing the amount of vacant space in the market, to drive down rents.
There are a number of exemptions and exceptions, and rating surveyors are advising that solutions can be found, albeit somewhat painful ones. The exemptions and exceptions are as follows:
As may be seen from the above, there is a large number of possible solutions. Care should also now be taken when structuring surrenders and re-lettings, to ensure the outgoing tenant is not let off the hook before the incoming tenant is on it. Meanwhile the British Retail Consortium, whose members are likely to be hardest hit, have challenged the Government to promise that if the new tax fails to bring the promised increase of commercial property onto the market, it will revoke it.
For further information, please contact:
Amanda Hado-Bodfield, Partner, Fladgate LLP (firstname.lastname@example.org)