Well said Mark Higgin (27.02.15). Empty property rates (EPR) is very unpopular.
It is a tax on failure, be it that of a landlord to find a tenant or of a business to require full use of its premises. And it is levied when the owners can least afford it; when property is yielding no return.
This discussion on aggressive avoidance is healthy. But I am concerned that the actions of the few who enter into “entirely artificial or contrived” arrangements will lead to reforms that affect the normal behaviours of everyone else.
Consider a landlord of a property that is proving difficult to let or sell. He is paying EPR and receiving no income. A small local business or a start-up has a need for a property, but cannot afford to pay any rent initially. To an outsider, it might appear strange that this tenant’s interest would be contemplated by the landlord but EPR alters the financial balance. What objection can anyone have if the landlord strikes a deal with the local business, allowing it to occupy his property for free?
This is very different to an owner engaging a pseudo-tenant whose only reason for existence is to provide a miniscule level of occupation intended merely to tick the boxes of rateable occupation and engineer entitlement to an EPR exemption.
Similarly, few would support the actions of an owner letting all his empty properties to a single company in the knowledge that the tenant intends to liquidate their business as soon as the lettings complete. However, such premeditated liquidation must be separated from the actions of an owner who finds himself in a situation that necessitates taking shelter under the protection of a voluntary liquidation arrangement.
It was the government’s aim in the Modernising Empty Property Relief consultation that The Rating (Empty Properties) Act 2007 should increase competitiveness. On the subject of intermittent occupation, it said the minimum period should be “not so long as to unduly restrict the ability of owners to bring premises back into use through flexible short-term lets”.
We see a need to clamp down on the few engaging in artificial practices. Let us hope government does not knee-jerk into ill-conceived reforms that make things worse.
Robert Hayton, national head of empty rates, Altus Edwin Hill