On 1 April 2011 the empty property relief for rates on empty industrial properties will end.
Property owners with empty property with an annual rateable value of between Â£2,600 and Â£18,000 will be charged for full business rates where previously they paid none. The effect of this could be devastating to owners of empty properties.
Owners of empty property face three stark options:
- Do nothing and pay the rates
- Find a tenant to take the property at a rent below open market value, possibly at zero rent
- Demolish the property to remove the liability
The removal of empty property relief can only damage growth. The troubled construction sector will be further hit since noone will speculate on the construction of new industrial units and risk being liable for rates if they cannot be let.
Problems are being created for further down the road when the demolition of existing properties and the lack of new properties will cause rents to rocket due to lack of supply when the economy picks up.
In the meantime property owners face a scramble to find tenants willing to occupy their premises on flexible terms. Easy In – Easy Out leases look set to become the norm and Farleys have a range of specially designed flexible leases for landlords and tenants who require flexible terms during these difficult times.