Business Rates Relief

My next post concerns an issue which is a pest for your average Commercial Landlord- business rates.

As I have stated ad nauseam in this blog, Landlords hate empty properties. That said, they may hate business rates a little bit more. According to the www.gov.uk website, business rates are taxes that are levied on non domestic Commercial properties, to pay for local services. Business rates are an issue that keep cropping up. In some areas they can be higher than rents- whence the fact that they are a complete nightmare for the Commercial Landlord. The next business rates re-evaluation is not set until 2017.

In the meantime- what can be done? As a Commercial Property Lawyer, I would make sure to advise my Landlord client of any applicable reliefs. After all 'every little helps' as they say.

The first relief is the Small Business Rate Relief (SBRR). You can only get SBRR if:

• You only use one property
• Its rateable value is less than £12,000

Until 31st March 2014, the Commercial Landlord (satisfying the above) can get 100% relief from business rates if the rateable value of their property is £6,000 or less. The rate of relief will gradually decrease from 100-0% when the rateable value of the property falls between £6001-12,000.

What if the Landlord has two properties? He/she can still get SBRR if the rateable value of each of the other properties is less than £2600. The rateable value of the properties is added together and the relief is added to the main property.

As you can see, the SBRR is likely to apply to very small low value properties. The Commercial Landlord who owns larger properties may wish to look at Enterprise Zone Relief (EZR) if s/he is looking to relocate to an Enterprise zone. The list of Enterprise zones can be found on the www.gov.uk website. The practical effect is that the Landlord will be eligible for 100% business rates relief for 5 years up to a maximum of £275,000.

As stated, Landlords loathe empty properties. However, they can get Empty Properties Rate Relief (EPRR). You do not have to pay empty property rates for up to three months. After this time, most properties will have to pay full business rates. However, some properties are eligible for further rate relief. They are:

industrial premises (eg warehouses) are exempt for a further 3 months

listed buildings - until they are reoccupied

buildings with a rateable value under £2,600 - until they are reoccupied

properties owned by charities (only if the property’s next use will be mostly for charitable purposes)

community amateur sports clubs buildings (only if the next use will be mostly as a sports club)

The Landlord will need to contact his/her local council once the property becomes vacant. Other reliefs are available for charities etc which can be found on the above website.

Business rates are a thorny issue for many Landlords. The Government is not likely to lighten the load anytime soon. The prudent Commercial Property Lawyer should assist their Landlord client to alleviate this burden.

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