Empty commercial buildings lose relief from rates

The Government said measures were needed to act as an incentive to encourage owners to bring empty properties "back into productive use" and to increase access to existing premises for business.

Until today, empty commercial property such as offices and retail properties received 100% relief from paying business rates for the first three months, and were only liable to a 50% rate thereafter. Empty industrial properties, such as warehouses and factories, received a permanent exemption from rates.

According to the Department for Communities and Local Government (DCLG) empty property relief last year cost £1.3 billion.

"It is not right that empty properties are subsidised by taxes elsewhere," said a DCLG spokesperson. "We can no longer justify offering tax reliefs for buildings to sit empty, subsidised by taxes elsewhere, when UK rents are among highest in the world."

Empty commercial property will now be liable for the full business rate after an initial rate-free period of three months, or six months for factories and warehouses. Charities, community amateur sports clubs and companies in administration will be granted a complete exemption from rates on their empty properties.

'Ghost towns'

Local Government Minister John Healey said: "No-one wants to live or work in a ghost town of empty offices and closed-down shops.

"These changes will help bring empty buildings back into use, reduce rents for small independent shops and create thriving high streets and town centres."

There have been concerns that some commercial developments will be left unfinished or that existing properties will suffer from deliberate dereliction or vandalisation as a result of the changes.

In December Mr Healey ruled out immediate anti-avoidance legislation to prevent commercial property owners from removing roofs or deliberately rendering their properties derelict, as he felt overall there was a "low risk" that this would happen.

However, he said councils already had tough measures available to them to tackle potential moves by owners to avoid liability, and gave a "zero tolerance pledge" to intervene if evidence suggested that deliberate dereliction was taking place.

Evidence shows that the prospect of damage or injury arising from empty buildings is high. For a free two page guide (pdf) from Norwich Union Risk Services on managing the risks associated with unoccupied premises, click here.