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The Government has decided to make major reforms to property taxes on empty property - this is bad news for anyone holding empty space or buildings i.e. landlords and corporate leaseholders with surplus space.

So what will this mean for my business rate liability?
On 1 April 2008, most properties that have been empty for more than three months - or, in the case of “industrial” property, for more than six months - will no longer receive empty rate relief; after the initial three or six month rate-free period expires, empty properties will be liable for 100% of the basic occupied business rate, unless it:

• Is held by a charity and appears likely to be next used for charitable purposes, or by a community amateur sports club.
• Qualifies for another exemption from rates under the NNDR (Unoccupied Property) Regulations e.g. is “listed” or subject to a building preservation notice; and held by companies in administration.

Can empty property be taken out of rating altogether?
If the property is not capable of beneficial occupation - for instance, if it is in poor condition - the Valuation Officer may agree a deletion.

If the state of the property has been damaged for the purposes of avoiding rates, under new anti-avoidance legislation introduced by the Government, the Valuation Officer will be required to disregard the change in the property’s state.  Damaging buildings generally won’t exempt them now.

How will my business rate liability be affected if the property is partly empty?
We can still get partial exemptions under the new rules but these will be much less valuable because of the new 3 month and 6 month limitations.

Can I appeal against these changes?
Generally no, unless there is a relevant material change in the property.  The changes are intended to raise a lot more tax and appeals are generally going to be difficult.  The changes in rates liability arising from the reforms to empty property relief are not in themselves grounds for appeal.  However, if you disagree with the rateable value, our team can exercise appeal rights.

Any more ‘good news’ we should know about?
Yes - the general property tax base will be reviewed on 1 April as well by the next Revaluation process.  We expect that this will lead to massive rises in tax bills when implemented because the new rateable values will reflect the massive rise in rents between 2003 and 2008 in many categories of property.

How can LSM Partners help?
To continue to help our valued clients by any maens possible.  Our objective remains to cut property taxes by continuous review of the opportunities and by all the skills and experience at our disposal.