RSUA welcomes DoF plan to charge full rates for vacant commercial properties

RSUA has lodged a broadly supportive response to a public consultation issued by the Department of Finance (DoF) on two reforms to the rating system intended to support regeneration, including the increase of rates on vacant commercial property from 50% to 100%.

RSUA stance on rating policy

Firstly, RSUA believes the rating system should incentivise bringing vacant buildings back into use by rewarding those who occupy them and penalising those who leave them empty.

Secondly, rates should encourage the repair and maintenance of derelict or dilapidated buildings, offering relief to new owners committed to this task and charging higher rates to those who allow these properties to deteriorate.

Proposal 1: Business Growth Accelerator

The Department proposes a new “Business Growth Accelerator”, temporarily delaying rates increases following commercial property improvements.

Currently, improvements that increase a property’s rateable value result in an immediate increase in rates liability.

RSUA supports this proposal. Our specific comments included:

• We are content with the proposed 12-month baseline for the grace period, but suggested flexibility to extend or reduce it depending on the nature of improvements undertaken.
• Enhanced support for bringing vacant units back into use should be considered carefully. The scheme could distinguish between long-term owners of vacant properties and purchasers acquiring vacant units with a genuine intention to bring them back into use.

Proposal 2: Non-Domestic Vacant Rating (NDVR)

The consultation also proposes a phased increase in rates for vacant commercial property, replacing the current 50% liability. Liability would first increase to 75%, before rising to 100% in a second stage.

RSUA is generally in favour of this proposal but made the following specific comments:

• Owners’ behavioural responses are more likely to be properly tested when liability reaches 100%. A phased increase to 75% may not create a sufficient differential to materially change owners’ decisions about whether to improve their buildings.
• RSUA does not support the Department’s proposal for continued exclusion of vacant listed buildings from the rates regime. However, there are circumstances where we believe a period of rates relief for listed buildings could be appropriate.
• An increase in rates could prompt owners of non-listed vacant properties to consider demolition as the most viable economic option. RSUA would therefore support the Department exploring a rates regime for empty sites.

More information

RSUA’s full response can be accessed here.

If you have any questions or comments about our response, please contact Curtis Large, RSUA Policy and Public Affairs Officer, at curtis@rsua.org.uk