According to Chancellor Alistair Darling this will exempt an estimated 70% of empty properties from the charge.
While this move is naturally welcomed, in the current climate, the extension of the Empty Rate Relief for a further year was not unexpected and the increase in rateable value from £15,000 to £18,000 merely matches the average 17% rateable value increase resulting from the 2010 Revaluation.
While the Chancellor is correct in suggesting that a significant number of empty properties will be exempt from the charge, it is questionable whether the number of empty properties actually amounts to a figure approaching 70%. Ever since its introduction, Empty Rate Relief has only ever really applied to empty properties outside of the more affluent south east, where only a few properties have a rateable value below £15,000 and so would qualify for the relief and in central London the figure would be even less than that. The increase of the exemption threshold to less than £18,000 will make little positive difference to London and the south east; in fact it may have a negative impact on some empty properties, which had previously been exempt from empty rates.
This is because, as a result of the 2010 Revaluation, the rateable value of empty properties will increase substantially above the national average, drawing them into the trap of the charge. Indeed, as a result of the 2010 Revaluation, the majority of London properties will see rate increases well in excess of the national average of 17%.
When the Government introduced the charge on empty properties in April 2008, it forecast it would net the Treasury in excess of £1billion over two years, as well as stimulating redevelopment of empty buildings and removing the administrative burden of appeals to the Valuation Office Agency (VOA). However, in the current climate none of these aims are likely to have been achieved.
While the 30% or more of properties actually paying empty rates may in reality contribute approximately 70% of the overall empty rates bill, any revenue accruing to the Treasury will almost certainly have been off-set by the increased administrative burden of appeals and the policing of those empty properties deemed beyond economic use through wilful acts of vandalism by creative landlords.
Whether the charge has also had the effect of stimulating redevelopment is also debatable in the present climate, where many empty properties have been let to charities for little or no rent and who are able to reclaim 80% of their business rates. Furthermore a number of companies have taken short-term tenancies to enable the owners to claim an additional exemption period following their subsequent vacation.
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