This is providing the value of the exemption does not breach European State Aid limits – currently €200,000 over three years. Existing office and retail property becomes liable to Empty Property Rates (EPR) after a three month void and industrial property after six months. Therefore the Chancellor’s decision grants new build property protection from EPR for an additional 12 or 15 months.
Exemption is insignificant
The policy is a step in the right direction but it is unlikely to spur speculative development. Larger scale development viability has far more to do with confidence in the occupier market, and whether there is finance available.
In reality, for all but the smallest developments, the exemption is relatively insignificant and developers believe the risk of EPR liability remains high. Further, in an unfortunate omission from the policy, major refurbishments do not qualify.
Government needs to be bold
The 18 month exemption appears tentative, while a three year period of grace would invigorate the market, encouraging employment, stimulating growth and raising future tax revenues from VAT, Income Tax and Corporation Tax. The government needs to be much bolder and come down firmly on the side of enterprise and growth.
This article is part of the spring 2013 edition of Rating in Brief.