Changes to Empty Property Rates Relief (EPR) came into force on 1 April.
The Government's stated objectives are to provide commercial property owners with a positive incentive to bring vacant shops, offices, factories and warehouse accommodation back into use and as a result to reduce business lease rents. The fact that this will bring in an estimated £950 million in extra revenue for the Government during the first year is purely incidental they say. In essence this is an extra tax burden for both business property owners and occupiers during an already tough period and there is much scepticism as to whether the so called aims of the Government will be achieved.
The new rules relating to EPR can be summarised as follows:
• Industrial property - 100% business rates payable after an empty period of 6 months
• All other commercial property - 100% business rates payable after an empty period of 3 months
The changes to EPR are perhaps going to have the biggest impact on new developments as these are left incomplete in order for developers to avoid an additional tax liability. This contradicts the Government’s target of bringing more space to the market place.
The impact on lease rents may also have the opposite effect to what the Government intends as landlords look to increase the amounts payable for shorter term leases to cover the risk of the property becoming empty sooner. The landlord will also want to ensure that the tenant bears responsibility for business rates where the property is vacant and to cover any lost EPR.
It is imperative to have lawyers who will work closely with you and ensure that the correct advice is given that will lessen the impact of the new rules on whichever side of the divide you sit. This is where Dunhams can play an important role.
