Empty Rates In the 2007 Budget report, the Government’s intention was to modernise business rates in respect of empty properties. The purpose of reform was to enhance the supply of commercial property available to new and existing businesses. The Rating (Empty Properties) Act 2007, which received Royal Assent in July 2007, raised the rates liability for empty commercial properties from 50% to 100% of the basic occupied rate, following an initial 3-month rate-free period, extended to 6 months in the case of industrial properties such as warehouses which had previously been entirely exempt. The 2008 empty rates changes were essentially a penalty; with the aim to expediate property occupation. The legislation is punitive for those Landlords who, despite their best endeavours, are unable to let their buildings within the short duration of the current period for relief. The proliferation of e-commerce, shifting consumer preferences and high street cost pressures have all led to an oversupply in retail space. The acquisition of the Debenhams and Arcadia brands, for example, saw all 562 stores totalling 1,389,137 m2 of retail floor space, the equivalent of 194 Premier League football pitches, across the UK coming vacant and to-let. Landlords will potentially have to face annual empty rates of circa £50 million for Debenhams and £91 million for Arcadia Group stores following the exemption period, unless new tenants can be found quickly once possession was taken back.
Edward Searle, BSc, MRICS Vice President, Altus Group
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The Government must urgently recognise that the current 3 and 6 month exemption periods are woefully inadequate to allow commercial properties to be refurbished and/or repurposed, marketed and relet. It is through that redevelopment and refurbishment that the real estate industry adds most value to the UK economy.
Landlords have been almost entirely overlooked by Government support measures during the pandemic, despite being asked to play a supportive role. The business rates ‘holiday’ for retail, leisure and hospital premises did not cover those properties vacant and to-let, and that exclusion left Landlords with estimated empty rates liabilities of £924 million in England and £25 million in Wales during 2020/21.
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