The construction industry was heavily affected during the credit crisis and subsequent recession, which resulted in a drastic reduction in output. The construction of new speculative developments all but stopped.

Even though we are seeing signs of increased activity and confidence, one of the factors to consider when deciding whether to give a development project the go ahead, is the worry that the property may remain empty for an extended period of time and there will be the cost of business rates in addition to any on-going funding costs.

One of the ways the government is trying to stimulate growth in the construction sector is the introduction of a new empty property rate relief scheme specifically for newly built commercial buildings.

The scheme is temporary and relief will be available for new properties completed after 1 October 2013 and before 30 September 2016 that are unoccupied for the first 18 months after construction.

Empty non-domestic properties are generally only entitled to a three month or six month rate-free period. Under the new build empty property rate relief scheme, a qualifying property may benefit from an additional 15 months or 12 months of rate relief. The relief is not available where existing properties are renovated.

Local authorities will have the discretion to grant the relief for properties which meet certain criteria. If the discretion is exercised, the government will reimburse the local authority for the amount of the discretionary relief. The relief will attach to the property, meaning that if the property is sold, the new owner can also benefit from the relief (subject to that ratepayer’s state aid limit).

This is obviously a welcome incentive for the construction sector, but it remains to be seen how much of an effect it will have on new development.

If you are considering a construction project and need advice in relation to the qualifying criteria for relief or in relation to any other aspect of your project please don’t hesitate to contact us, one of our commercial property lawyers will be happy to advise you.

By Tom O’Neill, Commercial Property Solicitor, Lancashire