Empty Properties - A COMET's eye view - lack of business rates relief

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Empty Properties - A COMET's eye view - lack of business rates relief

The recent announcement by Comet that it may be forced to close more than 40 of its stores brings into stark focus once more the perils facing owners with soon-to-become-vacant properties in their portfolios, including the lack of relief for business rates liability on empty properties.  For most properties, relief is only available for three months or six months, depending on the nature of the property.

With more businesses once considered safe bets showing signs of distress, it is becoming increasingly important for owners to look carefully at their portfolios and be creative when it comes to mitigating their rates liabilities. 

Short term periods of occupation offer one effective way should the opportunities arise.  Where property is occupied for six weeks or more, a further period of relief may be claimed.  In Makro Properties Limited v Nuneaton and Bedworth Borough Council [2012], the High Court held that even the occupation of a very small part of a property may be sufficient.

Property owners should also look to take advantage of seasonal requirements; it may be a little too close now, but in the run up to Christmas many of the larger retailers look for available premises to open specialist stores.  From a property owner’s perspective, this presents an opportunity for income as well as business rates mitigation. 

If short-term periods of occupation are unavailable then a property owner may consider whether there is any demand for a particular property at all.  To convince the valuation office that this is the case, the owner will have to show that it has actively and comprehensively marketed the property without success.   If successful, the property will be removed from the rating list. 

The latest British Retail Consortium survey found that the national vacancy rate in high street shops and retail centres is 11.3% - the highest on record.  The problem is not receding and, for many property owners, doing nothing and paying full business rates is not an option. 

It has been reported that the reduction in the relief available to owners of empty properties has saved the government around £400m in lost revenues.  However, the increasing number of empty properties in cities and towns can only serve to discourage those looking to invest, and suppress growth in the economy.  Encouragingly, an industry-wide group, the Distressed Retail Property Taskforce, has formed to investigate to what extent increased costs associated with property ownership is hampering growth, and formulate possible solutions.  We watch that space with keen interest. 

Chris Worthington, Solicitor, Property Services


Published: 6 Dec 2012

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