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Empty Rates Could Cripple Development- 12/05/2008
Regeneration and speculative office development could grind to a trickle as a falling Shropshire market is hit by the latest blow of empty property rates.
Law firm fbc Manby Bowdler LLP says falling values and the impact of the credit crunch on availability of funding have already dented construction activity. Now Government changes to business rates for empty properties could be the third whammy for the commercial property sector.
Commercial property associate David Lucas says: “The Government has pitched these reforms as bringing empty premises back in to profitable use. Instead, they look likely to have the opposite effect and appear nothing less than a tax grab.”
Before last month nearly all commercial properties attracted a nil rate of business rates for the first three months they were empty then a 50% charge thereafter. Factories and warehouses were exempt until they were occupied again.
From 1 April 2008, empty business properties like offices and shops cop the full business rates after three months – and factories and warehouses after six months.
There is still an exemption on commercial properties owned and left empty by charities or community amateur sports clubs.
Lucas concludes: “There is a big risk developers could leave buildings unfinished to avoid rates. Landlords and property owners need to take expert advice to avoid being left with excess extra costs.”