Just days from the introduction of an empty property rate relief scheme for newly-built commercial premises the Government initiative is already attracting heavy criticism.
The fine details of the £150m scheme have only just been released, but it is expected to benefit more than 11,000 new commercial properties including factories, offices and warehouses. According to Local Government Minister, Brandon Lewis, the concessions are “set to restore confidence in the commercial sector”.
The scheme covers all commercial properties completed between 1 October, 2013, and 30 September, 2016. The maximum period premises can be vacant to qualify for relief is 18 months. And under the rules, no individual company can receive more than £170,000 on a single development.
“It is these EU state aid limits which make the scheme fairly unattractive for larger new-build projects,” complained David Jones, a senior director with the commercial property management company GVA.
The Government has defined a “new build” as being more than 50pc new. It becomes liable when the building, or part of the building, is fit for occupation. That alone is a contentious point for his colleague, Susan d’Arcy: “The biggest disappointment is that the scheme only relates to new structures and has not been extended to cover extensive landlord renovations and refits on older properties,” she says.
Until April, 2008, all properties received a full three months exemption followed by 50 per cent relief when empty. Industrial properties fared better and were completely exempt when vacant. The Labour government then introduced significant changes so that, after three months, landlords of retail properties would be required to pay the full rate liability. For industrial properties, the grace period was set at six months before full rates were payable.
The result has seen a dramatic increase in rate avoidance tactics by landlords, with many agents and surveyors openly advising their clients to install temporary or intermittent occupants. Another significant spin-off – heightened by the recent recession – has been the drying up of all new build projects.
Chris Dobson is spokesman for the G9 Group of North-East chartered surveyors. “The penalty for moving ahead with a development is not only the cost of site acquisition, design and construction,” he explains. “But to make things worse if the building remains empty you are also liable for paying the rates.”
He sees the new rate relief measures more as an olive branch to the commercial development industry than any substantive benefit. “It is described as a ‘temporary measure’ and that there is no change in the rules on when a property becomes liable for empty property rates,” adds Dobson.
“Instead the Government is making the exemption available by reimbursing local authorities that use discretionary relief powers under Section 47 of the Local Government Finance Act 1988 – it will be for individual local authorities to decide whether to grant relief and that cannot be a wholly fair system.”
Previous Post
Jobs Boost As SIG Opens Gateshead Supercentre
