Harris Lamb Blog – 23rd Dec



Nick Aylett

23rd December, 2010.

Empty Rates – The Clock is Ticking…

By Nick Aylett, Agency Surveyor.

Based in Harris Lamb’s Worcester office, Nick deals with a plethora of commercial property clients in the region. In this, his debut Harris Lamb Blog, Nick takes time to discuss the impact of the recent announcement that the Business Rates relief for empty properties below £18,000 RV is to be scrapped as of 1st April 2011.

The route provides 27 miles of privately funded and operated highway from Coleshill in North Warwickshire to Cannock in South Staffordshire.  The road carried an average 47,592 vehicles on weekdays in the summer of 2010  and from my experience of the Toll Road, private cars form the vast majority of the traffic.
The M6 Toll Road was identified as an “M6 Relief Road” to alleviate congestion on the M6, which is something many people feel has not been adequately addressed and, with one way car tolls at peak periods of £5, this is something to be debated elsewhere.
From a property perspective the benefits have probably been more tangible than the traffic improvements.  The southern end of the Toll Road and the ‘T1’ junction close to J4 M6 coincided with some of the latter stage build projects at the Hams Hall National Distribution Park, a 430 acre business park which ranks as one of the best such employment parks in the UK.
Junctions T2 and T3 appear to largely function as commuter gateways for those living to the south and east of Sutton Coldfield from where national motorway access has improved considerably and the effect on house prices has been positive in these areas.
The access to Junctions T4 and T5 at Weeford and Lichfield has given a stimulus to residential and commercial property markets alike with possibly the biggest winner being the 300 acre Fradley Park, where some of the largest distribution buildings in the area have been built with more to come.  We are marketing the new Fradley Prologis Scheme with 70 acres and units to 700,000 sq ft available to be built and which will be on site shortly.
T6 Burntwood, a forgotten part of the West Midlands conurbation 10 years ago for business and for new build residential perhaps, has not quite been “transformed” but certainly “considerably improved”.
T7 & T8 and the Cannock access points to the Toll Road provided the catalyst that has helped to promote the former coal mining town into a first rate employment location.  Significant development of a cross section of employment type accommodation from offices to manufacturing and warehouse operations has bought vitality to Cannock which I think is largely due to the Toll Road passing the town’s doorstep.
For those drivers who still regularly sit stationary on the M6 between junction 8 and 10 bemoaning the state of the traffic and whether the Toll Road has done the job it promised, the tangible benefits are probably in property as much as traffic counts.  The commercial new build and viability of new schemes along the entire length of the Toll Road has been transformed since the road was built.
For the positive effects of the Toll Road you may look little further than the development and opportunity is has created alongside it.

Working predominantly within the Worcestershire area, much of the commercial property that I deal with on a day to day basis is in the smaller size category in line with majority of the businesses that locate themselves in the area.

As with all landlords of commercial property, the past two years have been challenging for landlords of these smaller premises, although we have experienced an upturn in enquiries for commercial buildings of less than 5,000 sq ft. This upturn in smaller enquiries possibly due to an increase of new, start up companies as a result of the recession.

However, from April 2011 times will prove to be more challenging for Landlords of these smaller commercial premises, with (thanks to the Government) a change in the exemption rules for empty property rates, which will see increased time pressure to dispose of vacant buildings with a Rateable Value of less than £18,000.

Currently, owners of any commercial property with a Rateable Value of less than £18,000 do not have to pay the “empty rates” levy, which effectively taxes buildings empty for more than 3 months. However, the Government has recently revealed that the empty rates exemption will be cut to just £2,600 from 1st April 2011.

From an Agents perspective, this change of legislation will undoubtedly transfer to increased pressure to dispose of the smaller buildings as quickly as possible, to reduce the landlord’s liability. Ideally, making the rates liability zero if the building can be disposed of within 3 months for an office / retail premises, or within 6 months for a commercial premises! From a tenants perspective however, this could translate into more competitive terms, to avoid landlords paying this “tax”, again as we’ve been experiencing with larger commercial premises over the past two years.

Another sector that this change in legislation will impact is Commercial Developers. Any Commercial Developer will now have to factor in the void rates liability before considering a small unit speculative development. We have seen the effect this has had on larger schemes already, there has effectively been a freeze on all speculatively built large unit schemes since the introduction of void rating legislation in 2007.

Undoubtedly, this legislation will not do anything to help restore confidence in the commercial property market. Rather than revoke the void rates relief on smaller property, it needs to be extended across the board. Until the government wakes up to this, the clock continues to tick for commercial landlords of all sizes.



Nick Aylett can be contacted on 01905 22 666 or email nick.aylett@harrislamb.com.

Disclaimer: The views expressed here (in this article or ‘blog’) are the personal views of the contributors and authors only and do not necessarily reflect the views of any named companies or thier employees.