Warning on new property law

YORKSHIRE'S property industry has been warned that it faces major upheaval unless immediate action is taken to mitigate the effects of forthcoming legislation.

Empty rate relief reforms are to be brought in on April 1.

Presently, only a 50% rate charge is levied for vacant offices and retail units after an initial three month exemption period and full exemption from business rates is granted to empty industrial properties.

However, the new empty rate legislation will result in vacant offices and shops receiving only an initial three month exemption from business rates and a full rate charge thereafter.

Empty industrial properties will receive a six month exemption period but will then be liable for a 100% rates liability.

Speaking at a seminar on the subject in Leeds, attended by 150 property professionals, Claire Paraskeva, director in GVA Grimley's rating department, said: “Business rates are often viewed as the third largest property cost for businesses after rent and service charge.

“The current credit crunch is already deterring some developer's from embarking on speculative developments and when they take into account the additional tax burden expected from April 1 for the full extent of any void period, it makes these schemes an even less attractive proposition.

“This could lead to a divergence in rental prices between primary and secondary locations. If levels of speculative developments fall in primary locations, there may be a shortage of supply, which will increase demand and drive up rents.

“In secondary locations, landlords could be forced to reduce rents in order to attract tenants quickly and this will make development opportunities in these areas less viable.”

As part of the new legislation, the Government is not to introduce 'anti-avoidance' measures which would prevent building owners from deliberately making their properties unfit for occupation, therefore avoiding business rates.

Ms Paraskeva told the seminar, which was hosted by GVA Grimley: “At the extreme end of the spectrum, we could see a return to the 1980's when many industrial landlords made buildings incapable of beneficial occupation by 'constructive vandalism', either by removing roofs or through other such drastic measures.

“However the Rating (Empty Properties) Act 2007 allows the Government to introduce anti-avoidance measures at any time and will closely monitor whether property owners are taking this type of action.”