As with all landlords of commercial property, the past two years have been challenging for landlords of smaller premises, although at Harris Lamb 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 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.

This is clearly not good news for any Landlord of such premises. However from a tenants perspective, 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 do little to help restore confidence in the commercial property market. Rather than revoke the void rates relief on smaller property, an extension of this relief across the board would go someway to helping the commercial property market back on its feet. Time will tell as to whether the government agrees that this is the best way forward.

For any assistance with regard to Commercial Business Rates or related commercial property advice, please contact Nick Aylett of Harris Lamb on 01905 727844.

Nick Aylett BEng (Hons) MRICS