Vacant Commercial Properties

If you’re responsible for any vacant business property, or you rent your property and there are empty properties in your area, this might affect you.

Since 1990 most vacant business properties have been entitled to a 50% empty property relief after an initial period of three months at 100% relief. Qualifying industrial properties have been entitled to 100% relief for the period they are vacant.

The relief was designed to allow a reasonable time for properties to be marketed and re-occupied. It also reflected the historical fact that business rates were a local property tax paying for services such as street lighting refuse collection etc. These days however business rates are not a local tax for services, but a national tax on property.

Hence as it’s a tax on property rather than occupation, there is little justification for having empty property relief. This is particularly so as a number of landlords have kept industrial units empty to avoid creating low rent precedents and have taken benefit from the minimal cost in doing so.

Consequently in his February Budget speech, the then Chancellor, Gordon Brown, announced that Empty Property relief would be restricted to 3 months for shops and offices and 6 months for industrial property, with exemptions for charities. The relief will be 100% exemption for the initial period. After this you will pay full-occupied rates.

At present the only exemption is for property occupied by charities or registered clubs who will be entitled to 100% relief on vacant.

The qualifying period for empty rates will start from the date the property became vacant not 1st April 2008. Therefore if you have a vacant property you will need to consider your options prior to 1st April.

Finally this change may benefit tenants who occupy units on an estate where landlords are deliberately not letting properties to maintain high rental values. Landlords will find that the costs of keeping units empty will increase significantly. They may be forced to let units at lower rents- rather than leaving them empty. Unfortunately only time will tell if this is the case. We will update you as more news comes in so watch this space!