empty rates update

There are significant changes relating to empty rates legislation that are causing the biggest shake-up to the rating system since 1990. Due to be implemented with effect from 1st April 2008, the changes could result in increased rates bills for owners of commercial investment property, such as you.

Industrial changes
The former 100% relief previously enjoyed by industrial owners will cease after a six-month period from the date either part or whole of your premises were vacated.

Office and retail changes
The former 50% relief previously enjoyed by office and retail owners will cease after a three-month period from the date either part or whole of your premises were vacated. The table below highlights the key changes following 1st April 2008 :-

TYPE OF PROPERTY	CURRENT POSITION	AFTER 1 APRIL 2008
Non-Industrial (retail/office)	100% relief for first 3 months and 50% relief thereafter	100% relief for first 3 months and full rates payable thereafter
Industrial (warehouses/factories)	100% relief at all times	100% relief for first 6 months and full rates payable thereafter
Listed	100% relief at all times	No change

Exemptions
There are some exemptions from the new legislation including empty listed buildings and companies in administration.

If the correct advice is sought, there may be mitigating arguments through three potential routes, including rating appeals, audit & compliance advice and strategic short-term letting advice, as follows: -

Rates appeals
The empty rates bills that you receive are based on a rateable value, which is based on a property valuation that is set by the Valuation Office every 5 years. Your current rateable value is an estimate of what your property would rent for a fixed date during 2003.

A rates review would involve a measured survey of the property and also research into rents that were being achieved in and around your building. A lack of available rents if the site is new can be a real advantage. If successful, a reduction would reduce your retrospective rates charge and also be of benefit into the future.

We have recently saved a national motor manufacturer over £50,000 for their head office premises due to a unique rating argument in which we successfully reduced a rateable value for our client based on the lack of demand for office space within the business park. This was despite a rent on the property that was not that helpful. This argument could be directly relevant to vacant property you occupy in particular where you have experienced some problems with lettings.

This service offering is quick and easy to implement and could work alongside the other service offerings below. There is also an added advantage that any successful review could enhance the marketability of the space, with a lower rateable value.

Audit & Compliance
This service involves looking at the regulations that underpin the non-domestic rating structure and identifying inconsistencies and errors by the charging authorities when levying the actual non-domestic rate charges.

This is an audit of the Local Authority's computation of your rate demand charge and is particularly relevant following a major refurbishment or development of a property.

The Local Authorities do not always correctly implement the regulations in this area of rating law. The financial implications of paying an incorrectly levied charge are considerable. Every case requires careful examination to determine the level of savings that may be achievable.

We recently saved a national serviced office provider over £350,000 over a retrospective 3-year period and we believe this and other similar opportunities could apply to your properties. We would firstly conduct a full audit of your rate demands and report back with our findings.

Strategic letting advice
An area of empty rates that is being retained within the reformed empty rates regime is the ability to re-apply for empty rates after a period of occupancy. We understand this period is remaining at 6 weeks and therefore, you may wish to consider a slightly different property marketing approach in particular for those buildings that could remain vacant for some time.

You may wish to consider allowing a short-term let of the accommodation with the knowledge that you can re-apply for a further 3 months relief after a relatively short timescale.

Alternatively, we can work with a Managed Office consultant who can source potential tenants that specifically want space on a flexible short-term basis. Managed solutions are becoming more common and should be a definite consideration. They work in a similar way to serviced offices but without the requirements to provide the administration support function.

Our Corporate team would be happy to discuss this with you or your retained marketing agents, as is appropriate. Please complete the details below and we will arrange for one of our Customer Services representatives to contact you shortly.

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Please feel free to contact Paul Giness or Heather Smith on 0161 228 2224 or emptyrates@bepart.co.uk to discuss any questions you have with the empty rates changes and how they impact on your sites. We would also be happy to arrange a meeting with you if required.