empty business rate relief, also known as empty property relief, is a scheme in the United Kingdom that provides a discount on business rates for properties that are unoccupied for a certain period of time. This relief is aimed at helping businesses that are facing financial difficulties and unable to occupy their premises. However, it has been a controversial topic, with critics arguing that it can lead to abuse and distortion in the property market.
Business rates are taxes that businesses have to pay on the non-domestic properties they occupy. These rates are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency. However, when a property becomes empty, the liability for business rates falls on the owner rather than the occupier. This can be a significant burden for landlords, especially if they are struggling to find a new tenant for the property.
empty business rate relief aims to alleviate this burden by providing a discount on business rates for properties that are empty for a certain period of time. In England, for example, empty industrial properties receive 100% relief for the first three months, and then a 10% discount for the remainder of the time they are empty. Empty commercial properties receive 50% relief for the first three months, and then full rates apply thereafter.
While this relief is intended to support businesses during difficult times, there are concerns that it can be abused by unscrupulous property owners. Some landlords deliberately leave their properties empty in order to take advantage of the relief, rather than actively seeking a new tenant. This can create a shortage of available properties in certain areas, driving up rents and distorting the property market.
In response to these concerns, the government has introduced changes to the empty business rate relief scheme in recent years. For example, in 2017 the government announced that empty properties with a rateable value of £2,900 or less would receive 100% relief, while properties with a rateable value between £2,900 and £15,000 would receive a tapered relief. This was aimed at targeting relief to smaller businesses that genuinely need support, rather than larger property owners who may be abusing the system.
Despite these changes, empty business rate relief continues to be a contentious issue. Critics argue that the relief should be abolished altogether, as it can distort the property market and discourage landlords from actively seeking tenants. They argue that instead of providing relief for empty properties, the government should focus on measures to stimulate economic growth and encourage businesses to occupy vacant properties.
Proponents of empty business rate relief, on the other hand, argue that it is a necessary measure to support struggling businesses and landlords. They point out that landlords may be unable to find tenants for their properties due to economic conditions beyond their control, and that the relief helps to prevent them from facing financial ruin. They also argue that the relief can help to prevent properties from falling into disrepair and becoming eyesores in the community.
Ultimately, the debate over empty business rate relief is likely to continue for the foreseeable future. It raises important questions about the balance between supporting businesses in difficult times and preventing abuse of the system. As the property market and economic conditions continue to evolve, policymakers will need to carefully consider the implications of empty business rate relief and ensure that it is targeted in a way that supports genuine businesses in need.