Budgets and Autumn Statements are always full of snakes and ladders, and the most recent Statement, with other announcements from the Department for Communities and Local Government, are no exception.
There has been partial recognition of the burden inflicted on developers by one of Gordon Brown final legacies in office; the contentious removal of empty rates relief. It continues to haunt many companies, investors and developers. Prior to the changes in legislation all empty properties received 100% business rates relief for three months in respect to offices and shops, reducing to 50% relief thereafter and empty industrials benefitted from a 100% indefinite exemption.
Far from stimulating the market and encouraging the landlords to let buildings at discretionary rents, it has raised extra money for the exchequer, hampered speculative development and written down the values of anything empty or likely to become vacant.
In Scotland, it is proposed that, with effect from April 2013, there will be a three-year waiver of rates on new, empty, speculative buildings, in order to provide some stimulus for the construction industry and Scottish landlords with a measure of relief from rates for bringing empty property back into occupation. A similar measure for England and Wales (at least as far as temporary exemption from rate collection for new properties is concerned) is coming through with the Growth and Infrastructure Bill, which is currently in Parliament. As yet, though, we have not been told what will constitute a new property for this purpose.
There have been two recent decisions on the subject of new buildings coming into rating. Both cases considered completion notices served by Councils who decided that a building under construction should be treated as finished and therefore liable to pay rates. The Lands Chamber decided in 2011 in Porter (VO) –v- Trustees of Gladman Sipps that a new building could not be regarded as complete as it lacked power points, tea points and partitioning. Most recently in English Cities Fund (General Partners) Ltd and Anor -v- Grace (VO) and Liverpool City Council, the President of the Valuation Tribunal for England decided that Liverpool City Council acted unlawfully in serving multiple notices on a new property on a “floor-by-floor” basis to circumvent the three-month period in the Act.
Of more general and immediate significance to a majority of ratepayers, though, is the decision (to be enacted as part of the same Bill) to postpone the 2015 general revaluation for two years. The Government says that this will give a longer period of stability to ratepayers to enable them to predict what their rate liabilities are likely to be. There are some who think that the delay will serve to weed out the sick and weak in the high street; but the majority think that postponing the revaluation delays the redistribution of value which a revaluation would entail.
Rateable values are based on rents passing two years before a new list comes into force. Considering the level of rent in an area in 2008 prior to the credit crunch compared to current rent levels, it is easy to anticipate the impact a delayed revaluation will have on rateable values. It is clear however that Ministers are divided on the issue and we will have to wait and see what emerges.
Andrew Hulbert BSc MRICS IRRV, Rating Surveyor, Harris Lamb