New ruling may help owners of empty commercial properties

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Owners of empty commercial property that is being refurbished normally have to pay business rates set according to the full ratable value of the property when occupied. However, this could change due to a recent Supreme Court ruling.

Even if property is not fit be occupied, after a period of rates relief, full rates are charged. Landlords owning these properties receive no rent to help towards rates and their commercial mortgage repayments.

David Bailey, a Fylde Coast solicitor specialising in property disputes, told the Blackpool Gazette in March 2017 of a recent Supreme Court decision. It ruled that a property that was unfit for occupation because it had no electricity, air conditioning or tiles on the ceiling should have its ratable value decreased from £100,000 to only £1, and should fall into an ‘undergoing reconstruction’ bracket.

Bailey, commenting on this ruling said:

“Before this decision, businesses were also expected to pay business rates even if a property could not be occupied due to refurbishment. Many felt this was a highly unrealistic scenario, and argued that the rates should not be due if a building cannot be occupied. It’s great that the Supreme Court has given its view in this case, which in future could ease the burden on many owners.”

As part of his Spring Budget, Chancellor Philip Hammond announced measures to help businesses by easing the rates burden on commercial property. The Supreme Court ruling could also help property investors who are refurbishing commercial property.

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