'Deliberate dereliction' of empty business premises

The move is part of a package of measures from the Department for Communities and Local Government (DCLG), which is aiming to "revitalise" towns and cities through a review of business rates for empty properties.

In particular, the Government said it wanted to propose ways of tackling "rate avoidance". While it acknowledged that most property owners did not deliberately vandalise their empty properties in a bid to avoid rates, it claimed a small minority may be tempted to "render it incapable of economic repair to avoid paying the rates".

Owners of empty non-domestic property currently qualify for significant relief from rates, receiving at minimum a 50% relief from the occupied business rate, while owners of empty industrial premises enjoy a complete exemption.

Not so simple

Mike Colmans, property owners underwriting manager at Norwich Union, said he welcomed any move that would reduce the likelihood of buildings falling into disrepair.

"Empty derelict properties present a greater risk to insurers in terms of arson and malicious damage. Such attacks may not only affect the derelict property, but also those surrounding it. We therefore welcome the Government's efforts to remove any incentive to allow dereliction to occur."

However, he went on to tell us that the issue was not so straightforward, in that the majority of business property owners had legitimate reasons for their properties becoming unoccupied.

"It's not so simple to say that property owners are incentivised to allow commercial properties to become unoccupied through relief from rates. This not only ignores the reduction in income experienced by the property owner, but also the additional terms often imposed by insurers.

"Because unoccupied buildings present a much greater hazard, the cost of fire insurance usually goes up, cover may be restricted and additional terms imposed. We therefore have a certain amount of sympathy with property owners over their concerns about the removal of rate relief."

Tell you insurer

Ted Kenrick, Norwich Union Risk Services' technical services manager, said it was essential that insurers were informed whenever a property became unoccupied.

"Risk control procedures need to be put in place at the time the building is vacated to manage the increased risk of fire and malicious damage - such as regular inspections, removing rubbish and improvements made to the security of the premises.

"Insurers will also want to know why the property has become unoccupied, for how long it is expected to remain empty and what the future plans are for the premises so that any assistance can be given where needed."

The Rating (Empty Properties) Bill has already successfully completed its passage through Parliament and awaits Royal Assent. The Government said it believed reducing rate relief on empty properties would provide a "strong incentive" for owners to re-let, re-develop or sell empty non-domestic buildings.

It is now consulting fully on the issue of deliberate avoidance as well as inviting comment on exemptions for listed buildings and possible exemptions for properties owned by firms in administration'.

Full details of the 'Modernising Empty Property Relief' consultation can be found on the DCLG website - see link above/right.