Barry Jervis and Ben Humphreys are right to warn landlords and corporate occupiers to be prepared for a legislative change to empty rates following the decision in Principled Office Logistics vs Trafford Borough Council (31.08.18).
This is a change that Wales and Scotland are already pursuing and has been considered previously in England through a DCLG consultation in 2015.
However, I believe they have missed the point regarding the cause of the problem. They state that empty property relief was first introduced in 2008, but this is not correct.
Business rates have historically been a tax on the occupation of property, with vacant properties fully exempt. Prior to 2008, vacant properties in England benefited from an initial three-month rate-free period, following which rates were paid at a 50% discount. The legislative change in 2008 removed the 50% relief.
By increasing the tax on empty properties, landlords have seen an increase in their rates liabilities at the very time when their property assets are at their weakest.
The timing of the change also did not help, with the onset of the recession increasing vacancy rates across the country. This is what has resulted in the proliferation of rates mitigation schemes.
While landlords should be incentivised to re-let or redevelop vacant properties, this is not always an available option.
A better move would be to take business rates back to being a tax on the occupation of property, not simply a cash cow for government. This would remove the need for rates mitigation schemes altogether.
Simon Berkley, associate, rating, Montagu Evans