The property industry is nothing if not adaptable and now that there is no longer any empty rate relief on warehouses a plethora of advice is available to help mitigate the financial burden.
Robert Hayton of Altus Edwin Hill advised: “Don’t appeal an assessment on your vacant space out of a knee-jerk reaction to receiving the bill. Rateable Values can be increased by a Valuation Officer and there are occasions where it is inappropriate to appeal.”
He added: “Do check that you have received the full relief period. Vacant buildings will now be taxed as if occupied, ie a full liability, after an initial rate-free period of six months on warehouse/industrial space. Exemptions to empty rates include listed buildings and those held by charities, but there will be loopholes to identify and exploit.
“It is important to highlight that the initial ‘rate-free’ period for warehouse/industrial property has already expired where a property has been vacant for six months or more prior to 31 March 2008.”
Hayton suggested occupiers and owners should consider using vacant property, even if it is for storage purposes. “An interesting issue, which warrants further investigation, relates to the existing rule for the period a property needs to be ‘occupied’ before qualifying for the six (or three) month empty rates relief period. The period is currently only six weeks, after which relief can apply again if the property becomes vacant.”
Adrian Rose of Atisreal added: “If a landlord was to use an empty warehouse for storage for six weeks and informed the billing authority that the property was now let, they would then qualify for the rates holiday of six months. Technically, this could continue in a cycle of six week ‘lets’ and six month ‘holidays’.
Hayton added that owners should consider the way the space is uses if only part of the property is vacant. If a property is only partly occupied, the billing authority has discretion to request that the valuation officer apportions the property’s rateable value between its occupied and unoccupied parts.
The new legislation is not entirely transparent on the issue of under-use space. Relief for vacant areas does exist beyond 1 April 2008 but only, in theory, for maximum periods of six months for industrial property (and three months for other classifications).
“Maximising relief on under-use space may require a greater degree of logistical space planning and management than has previously been the case. Businesses may have to schedule the movement of their operations within partially occupied space to exploit the savings potential,” said Hayton.
There is also exemption from empty rates if the property is deemed ‘unlettable’ said Rose. “A property can be deemed to be incapable of beneficial occupation and thus not rateable, if it does not comply with the necessary statutory legislation. Tactics such as removing flooring or other parts of the interior building so that it is back to a shell have been discussed widely in the market. However, this is more complicated than it appears.”