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'Business as usual' despite new property relief rates introduced

New relief rates for unoccupied commercial properties came into effect yesterday under the Empty Property ratings Act 2007.

Under the new rules, owners of empty office or retail space will pay full business rates after an initial three month exemption period, instead of the 50% discounted rate previously available.

Vacant factories and warehouses will be eligible for a six month exemption period before paying the full rate.

The Chancellor of the Exchequer, Alistair Darling, hopes this will encourage better use of development space and result in buildings lying vacant for shorter timescales.

However developers say it will have the opposite effect, instead encouraging the established practice of stripping buildings down to their framework so they can be classed as derelict and developers cannot be charged.

Robert Murdoch, a partner at developer Drivers Jonas says it will be "business as usual" after 1st April, and they will continue to advise clients accordingly.

Speaking on avoiding the extended business rate charges, he said: "There are legal ways to do it and this is what we will be advising customers to do as long as it remains legal."

The government has suggested that it will implement new punitive measures for companies attempting this practice if there is widespread abuse.

But Murdoch sees this as unlikely. He commented: "If on the 1st Aril everybody decided to strip out their buildings at the same time, the government would probably react, but that's not going to happen."

He continued: "As long as it's done as normal ongoing development works, as long as it's business as usual and not a knee-jerk reaction [nothing will happen]."

The British Property Federation Director David Melhuish agrees with the view that there won't be a need for government to enact punitive legislation.

"I don't think it was particularly good policy making by the government, and I don't think there will be such wide-spread abuse as was commented on."

He added: "This has been very short-sighted and will lead to the consequence of deterring speculative development."

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