The Chancellor announced that all newly built commercial property completed between 1 October 2013 and 30 September 2016 will be exempt from empty property rates for the first 18 months (up to the state aids limit). Currently, there is only a 3 month exemption available on empty property rates, and so at first glance, this proposal seems likely to “promote further private investment”, which is its stated aim.
However, in the current environment, it is questionable how many developers are building new commercial property without first having found tenants. There certainly does not seem to be much speculative development happening at the moment, nor is it likely that the introduction of this relief will encourage such development.
The real estate industry had been lobbying before the Autumn Statement for a relief from empty property rates, and RICS recently published a report stating that “empty property rates are having a negative impact on the growth and development of retail, office and industrial space across the country”. The 18 month exemption for new builds goes further than many hoped, but the impact of empty property rates on existing retail, office and industrial space had not been addressed at all. The new exemption will also not cover buildings that are being refurbished, as had been hoped.
The impact of this new exemption remains to be seen, but is likely to be smaller than the Chancellor may have hoped. We expect that property investors will continue to call for additional empty property rate reliefs to encourage growth in the UK real estate market.