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Killer Bunny

Commercial Property Rates

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Since April, owners have had to pay rates when empty when, up till then, there was no payment needed. This will exacerbate reductions in asking prices for rents. I am seeing it in Herts. NB. Large number of THE SAME offices STILL available since 1 and 2 years at stupid rental asking prices (because that's what we used to get...).

I hadn't seen any of this and I just thought I'd mention it.

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Since April, owners have had to pay rates when empty when, up till then, there was no payment needed. This will exacerbate reductions in asking prices for rents. I am seeing it in Herts. NB. Large number of THE SAME offices STILL available since 1 and 2 years at stupid rental asking prices (because that's what we used to get...).

I hadn't seen any of this and I just thought I'd mention it.

Empty offices and shops/charity shops abound (you get an 80% discount on business rates if you stick a charity in there). Just looking out the window, there is one charity shop and 4 empty shops out of a total of 10 shops. 2 have been empty for over a year, one vacated two months ago (Sony Shop) and one vacated a week ago. There's also an empty office over the road and three of four more round the corner. There is more empty space than used space. Finally, there's also a 2nd hand car garage that sold good quality 2nd hand motors that was vacated a month back just round the corner, and it is a vacation, not a move, as I phoned to ask where they had moved too, only to be told by the despondent voice on the other end that they were shutdown, not moved. All this within sight or a few seconds walk of where I live and directly adjoining the high street.

ONWARDS TO THE RECOVERY BRAVE PROLETARIAT!!! :lol:

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Yup, numerous warehouses and small units around here have been knocked down instead of paying for this tax.

In a funny twist of events remember that old chip shop I very nearly rented?

Its empty now and they are getting raped on biz rates, silly sod even had the cheek to ask me if I'd rent it again and offered a whopping £15 discount a month on the eyewatering rents.

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What I'm seeing quite a lot is commercial properties being converted into residential, because the landlords can't find business tenants.

I recently saw one office block, where the vacant units have been let as flats. I saw one - it was hilarious. Ceiling tiles, strip lights, mounting points for data projectors, computer network wiring, air conditioning and a huge floor-to-ceiling, wall-to-wall window with metal venetian blinds. Just a big open plan office space, converted with a kitchen in one corner. Down the landing, some of lavatory stalls had been removed and replaced with a shower cubicle.

The remainder of the block was still offices, so the building would be quite busy at all times of day, and deserted at night.

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Since April, owners have had to pay rates when empty when, up till then, there was no payment needed.

I didn't realise that. Is it the same for each area? I thought rates have always payable after a certain empty period...

Edit

"You pay no business rates for the first three months that the property is empty. This is extended to six months in the case of certain industrial properties. After this period, rates are payable in full (100%). However, listed buildings and small properties with rateable values of less than £18,000 pay no rates at all, even after the first three months.

Empty property relief is available to the owner - in this case the owner is the person entitled to possession of the property in question."

http://www.lichfielddc.gov.uk/site/scripts/documents_info.php?documentID=94&pageNumber=3

It has been like that as long as I can remember. Lord knows how landlords can afford to leave large industrial units empty for years on end and not want to negotiate on the rent??!

Edited by foxy

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I didn't realise that. Is it the same for each area? I thought rates have always payable after a certain empty period...

No, it just came in in April - right across the UK. There must be thousands of landlords of all shapes and sizes getting screwed.

Partly explains why some of the big chains have been basically saying to their landlords what rent reduction they want - if a big chain walks in this economy then the landlord company could just as easily go under.

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No, it just came in in April - right across the UK. There must be thousands of landlords of all shapes and sizes getting screwed.

Partly explains why some of the big chains have been basically saying to their landlords what rent reduction they want - if a big chain walks in this economy then the landlord company could just as easily go under.

It's been around for ages, but subject to a minimum rateable level - i.e. those below the threshold did not pay rates. This threshold has reduced from c£18,000 to c£2,500 in April.

As to the change to residential (from another post), there is some sense to this for the local councils. Local councils get to keep Council Tax, whereas business rates goes back to central Govt. This change of use is more likely due to localism based legislation.

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Got any linkage for that? ta.

Nah. Just google it - there is plenty of info about it.

http://www.stourbridgenews.co.uk/homes/commercial/8819049.Empty_Business_Rates___The_Clock_is_Ticking___/

http://www.lawpack.co.uk/landlord-and-tenancy/commercial-leases/articles/article5459.asp

5 tips for landlords on how to avoid tax on empty buildings

Here are some tips on how to get tax relief on your business rates:

1. Use a charity

As mentioned, leasing an empty building or shop to a charity can help you to avoid landlord tax in the thousands as charities pay no or reduced business rates.

2. Demolish the building

The reduced tax relief on business rates was nicknamed the “bomb-site Britain tax” as many landlords scrapped projects and demolished buildings to pay less tax when the levy was introduced. If the building is at the end of its useful life, this may be a way to avoid landlord tax.

3. Vandalism

Buildings that can no longer be occupied don’t pay business rates, but the ‘vandalism’ must be relatively dramatic. It can even include stripping a building back to its shell or taking the roof off. The other option to save landlord tax is to start redeveloping the building, but never finish it.

4. Intermittent occupation

Buildings that have been occupied for six weeks qualify for another three or six months’ tax relief from business rates when they are empty. To let landlords avoid tax, there are companies that are springing up which offer to occupy buildings on short-term leases. To pay less tax, the landlord will pay the tenant to occupy the building rather than the tenant pay rent to the landlord.

Just get the WI in! :lol::lol::lol:

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It's been around for ages, but subject to a minimum rateable level - i.e. those below the threshold did not pay rates. This threshold has reduced from c£18,000 to c£2,500 in April.

Ah, that explains it, thanks. The properties I've been looking at would've been over the threshold anyway.

Still, why do these property companies leave £50kPA units empty for years?

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Ah, that explains it, thanks. The properties I've been looking at would've been over the threshold anyway.

Still, why do these property companies leave £50kPA units empty for years?

At a guess (in order of likelihood)

a) they can't let them

B) they have a loan, which will be breached if they let at a new lower rent, as it will bring the value down (LTV)

c) they own nearby properties and they do not want to produce rental evidence which would compromise rent reviews on those other premises

as I say it's in order of likelihood, and is probably no more complicated than a lack of demand. Remember they'll also be paying maintenance, and standing utility charges

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At a guess (in order of likelihood)

a) they can't let them

b ) they have a loan, which will be breached if they let at a new lower rent, as it will bring the value down (LTV)

c) they own nearby properties and they do not want to produce rental evidence which would compromise rent reviews on those other premises

as I say it's in order of likelihood, and is probably no more complicated than a lack of demand. Remember they'll also be paying maintenance, and standing utility charges

:P @ a) !! Talk about the bleedin' obvous! :D

Hadn't thought about b and c - I'm amazed that they can go on spunking £30k+ per year, year after year on multiple properties.

Cheers for the insight.

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Some confusion here.

What happened in April was a return to normal. The suspension of rates on empty commercial property was an emergency measure brought in by Brown&Co to protect property owners from the worst of the recession and take away the pressure to reduce rents. Renewed for a second year in the pre-election statement in December 2009. Finally ended by the coalition, with a years warning to give the landlords time to prepare (find a price some tenant will pay).

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as I say it's in order of likelihood, and is probably no more complicated than a lack of demand. Remember they'll also be paying maintenance, and standing utility charges

don't forget to add security costs as these still have to be paid for. I pulled up at a unit (in Fradley) that's been available To Let for a loooong time and some spotty teenager wearing a security cap and shirt sporting epilates

purporting authority came over to me - told him I was taking advantage of the free car parking (empty, obviously) and he was happy and left me alone.

24/7 security at NMW is touching nearly £50k per annum!!!

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I pulled up at a unit (in Fradley) that's been available To Let for a loooong time

Which one? Better not be the one I've had my eye on !!

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Ah, that explains it, thanks. The properties I've been looking at would've been over the threshold anyway.

Still, why do these property companies leave £50kPA units empty for years?

Commercial landlords can be a very strange breed.

At the smaller end of the market most landlords -particularly in my area - are small family run concerns who have built up portfolios of shops and industrial units over the last 40 years or so, becoming multi-millionaires in the process and minor local bigwigs.

One thing they all seem to have in common is an utter contempt for their tenants and a sense of entitlement to collect huge amounts in rent for the bare minimum in return. Even in straightened times they see upward rent reviews as a right, and by and large would rather have properties standing empty than letting them at a reduced rental and setting a dangerous precedent for the rest of their estate.

The requirement to pay full business rates on empty premises is a fine thing. Anything that pushes these arrogant assholes towards reality (and preferably bankruptcy) is to be applauded.

Edited by Mr Yogi

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How difficult is it to turn a shop into a residential home? I would have thought that the LA/Govt woulld prefer to have business rates rather than much lower Council Tax?

Very, anedotally Rob a builder friend I know says the council rarely if ever gives permission for this as business rates are a massive money maker for the government. A small shop which fits into a terrace two up two down can pump the government £2-£5K in biz rates. AND you have to pay for your bins to be taken away ONTOP of this.

While council tax is still gougy but bin removal is included.

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Commercial landlords can be a very strange breed.

At the smaller end of the market most landlords -particularly in my area - are small family run concerns who have built up portfolios of shops and industrial units over the last 40 years or so, becoming multi-millionaires in the process and minor local bigwigs.

One thing they all seem to have in common is an utter contempt for their tenants and a sense of entitlement to collect huge amounts in rent for the bare minimum in return.

I can't agree more, the people like this who I did accounts for were just as you describe. Except for one guy who had over stretched himself massively. He was pretty savvy stating he can't increase prices otherwise people won't rent it and he'll be snookered.

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