Following on from our look at business rates and their impact, and potential impact, on Britain’s high streets, the Government has announced further changes to rates for the commercial, new build sector – hopefully incentivising speculative investment.
The changes take the form of a new ‘empty property rate relief’ for newly built commercial buildings, due to become available next month. The incentive is worth an estimated £150 million and could benefit over 11,000 new commercial properties including warehouses, offices and factories.
The discount was announced by the Chancellor in his Autumn Statement to encourage development by reducing the business rates liability of owners of unoccupied new buildings. A simple example is a new build office that is unoccupied from the date it is completed for 18 months. In such a circumstance, the ratepayer would not be required to pay rates for the first 3 months under the 2008 Regulations and then would benefit from 15 months new build empty property relief provided through section 47 of the Local Government Finance Act 1988 – the new incentive.
Guidance published recently sets out the detailed criteria and eligibility for this additional relief for empty new builds (available on the link).
The change builds on other steps the government has taken to help firms with their business rate liabilities – including doubling small business rate relief for 3 years; benefiting half a million properties. They have also been keen to highlight their introduction of the Employment Allowance, which is projected to see 450,000 of the smallest businesses paying no employers national insurance contributions at all, and reforms to the main rate of Corporation Tax which will mean that, from April 2015, the UK will have the lowest rate of Corporation Tax in the G20.
Brandon Lewis MP said:
“This move will boost confidence in the commercial property sector and allow them to develop new projects again without worrying about the risk of rate bills on empty buildings whilst they find a buyer.
“This is the latest in a series of decisions by the government to address business rate concerns, help stimulate the construction industry and encourage economic activity across the country.”
Exchequer Secretary to the Treasury, David Gauke, said:
“This government is committed to supporting business and encouraging growth. We want to provide targeted support, where it is most needed, and it is hoped the empty property rates relief will incentivise the construction industry by reducing risk.
“We have taken a number of steps – including introducing an Employment Allowance, extending the small business rates relief and reducing the main rate of Corporation Tax – that will stimulate growth in the economy and ensure the UK remains a competitive place in which to grow and do business.”
The inadvertent result of this ‘stimulus’ may be to penalise the owners of existing empty commercial properties. There logically will be a greater number of new builds which will make the older stock less attractive. New occupants will gravitate to the higher spec new properties, leading to an accentuation of the under-occupancy issue with older structures.
SRJ / LCB 12/09/2013