BFLNov.08 18/11/08 5:26 pm Page 18
property
car showroom and also most as the valuation date is 1 April 2008.
manufacturers are represented within a Has the Government rationale worked, is
few hundred yards. The lack of a yard or the market more competitive and efficient?
adequate display area rules this out for the The answer would be no, it is very easy to
second hand trade. Motorbike dealers are get sidetracked with the global credit
also represented nearby. The only interest crunch and the far reaching consequences,
requires a change of use which will not be timing is everything. However, as
granted. Government has bailed out the banks with
The Government rhetoric all sounds very approximately 500-times the amount they
plausible, and indeed some would say expect to collect in additional rates, then
admirable, but when the harsh light of day they could have restored confidence by
dawns they did not consider that the last scrapping or even delaying the legislation.
thing that anyone either holding onto Instead, confidence and their popularity
empty property, or about to be vacate has been hurt and the fiscal incentive has
property, needs at a time of uncertainty is turned into financial hardship. Development
an increased tax burden. This will have a has been stifled and no green shoots of
knock-on effect on current and future recovery are apparent.
developments as well as affecting future
transactions. Offset the liability
Has Government succeeded in reducing
Disaster rents? This was the main thrust of the
This one size fits all legislation has been an legislation and again the answer is no,
unmitigated disaster and not surprisingly although the credit crunch has muddied
the reverse of Government intentions has the waters to a great extent. Commercial
happened. Sites landlords have
are not being
Government has bailed
been advised they
developed, the
out the banks with
can charge higher
lack of finance is rents for short and
probably the main
approximately 500-
flexible lease terms
culprit but even
times the amount they
to offset against
in the best of the cost of empty
economic climates
expect to collect in
property rates.
few landlords or
additional rates
The new leasing
developers would guide, a best-
be willing to pay rates on empty sites, the practice guidance, issued by 12 trade
additional costs involved make the bodies including the BPF, CBI, RICS and
Small gesture,
necessary investment a non starter. Void BRC, and supported by Government,
huge impact
periods are longer as the expansion of advises occupiers to push for greater
business including those SMEs that flexibility in negotiating terms but it says
Compared to the amount
Government wanted to attract has not “An owner may consider it appropriate to
‘
happened and most companies are now seek an increased rent for a shorter lease
of money being thrown
contracting rather than expanding. Many term to cover or contribute towards the
around to bail out
sites that could be redeveloped cannot risk of space becoming vacant sooner.”
reckless bank lending, because of planning policy so there are Without the credit crunch we are more
the amount it would
many instances where properties could be than likely to have found that rents
cost the government
put to an alternative use but require increased as landlords offset the rate
to re-introduce empty
planning permission which won't be liability incurred with their asking rents.
granted and many have been demolished Previously it has always been recognised
rate relief is
to avoid rates. that charging empty rates serves no
comparatively small
For those with empty second hand purpose where there was no market for a
fry. It would however stock the news is worse. The market has property, clearly there is only a very limited
make a massive
stalled if not collapsed, there are few market for this showroom and the owner is
difference by halting
looking for secondary or tertiary caught in a Catch 22 situation where there
accommodation particularly when there is could potentially be interest but not in
the growing stream of
an oversupply of prime stock. The Rateable current use and yet the current use cannot
disastrous demolitions
Values of such properties are also based be altered. Planning legislation needs to
and bankruptcies on rental values in 2003 when the stock keep pace with Rating Legislation but even
resulting from firms
wasn't so old and values more buoyant. with a change in use there is a limited
paying tax on
The current economic downturn is not market at the current time making it easy
properties they cannot
reflected in the existing Rateable Values as to see why landlords of other awkward
generally the only changes that will be properties around the country have taken
use because of the
taken into account are those that relate to the decision to demolish – which is the last
recession.
the physical state of the assessment and thing that any one wants to see happen. a73
Liz Peace, ceo, its locality. Changes in economic factors
British Property Federation may be taken into account for the David Burke is a partner in Corporate
forthcoming 2010 Revaluation especially Real Estate Services at King Sturge LLP
18 building forleisure November 2008
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