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Government threat over business rates "vandalism"

With its plan to raise nearly £1 billion from changes in the business rates regime in jeopardy through aggressive reaction by developers, the Government is threatening a strong response. Philip Woolner of Cheffins Commercial says that a number of developers have warned that they will leave newly constructed buildings partially incomplete or will demolish redundant buildings to avoid the proposed changes which came into effect last month.

He claims that the changes will affect business owners and landlords, too, who have empty properties in their portfolios. “The reduction in the period of grace while commercial buildings are vacant is penal. From 1 April 2008 any vacant commercial property that has been empty for more than three months – or six months in the case of industrial buildings –now attracts liability for full business rates. At present relief of fifty per cent or more is available following an initial void period of three months.

“In addition, the three or six month period of exemption will not roll forwards from the start date of 1 April in the case of existing vacant premises. The holder of an empty property will instead receive a demand for full rates at day one which is clearly a major concern for owners or leaseholders with vacant units sitting in their portfolios.”

A leading developer has threatened to leave the roof off new unlet developments to avoid an extra £8 million rates bill and the chief executive of Brixton, which owns warehouses valued at £2.4 billion, said that the imminent changes to rates relief would mean that his company would demolish old buildings earmarked for redevelopment far sooner than planned, leaving ‘piles of rubble’ in their place, saving some £5 million.

A Government Minsiter has threatened “zero tolerance on commercial vandalism”.

Philip Woolner says: “The timing of this new regime could not be worse, with the Credit Crunch beginning to bite and the danger of longer vacant periods for commercial properties as firms draw in their horns. The answer may be to reduce rents to ensure buildings are let quicker but that can only have a further adverse impact on property values.”

FOR FURTHER INFORMATION PLEASE CONTACT PHILIP WOOLNER ON 01223 213666 OR EMAIL: philip.woolner@cheffins.co.uk.