By Altus Group | April 2, 2020

Through the business rates system, the Government is providing a great deal of financial support to businesses affected by the COVID-19 outbreak. One group that isn’t seeing support are landlords. The time has surely come for the Government to recognise the unfairness in the way that the empty rates system operates in these unprecedented times.

It is right that the Government has offered significant financial support for occupiers of premises in those sectors most adversely affected like retail, leisure and hospitality through business rates holidays and grant funding but those measures don’t extend to those properties vacant and to let.

Landlords with empty properties are having to face head on not only the impact of the new protective measures passed by Government meaning that no business will be forced out of their property if they miss a rent payment within the next three months but an effective lockdown too.

Whilst landlords are well versed in managing risk, none could have foreseen nor planned financially for a global pandemic resulting in occupation of properties being prohibited by law nor the challenges they now face as occupiers attempt to use the protective measures as a deferment period to aid their own cash flow significantly denting rental income.

Landlords have largely put their head above the parapet and stood tall ready to help their tenants. Whilst the assured and highly impressive Chancellor, Rishi Sunak, has dished the cash out to try and negate the economic impact of COVID-19 upon business, landlords of commercial property have so far been over looked despite being asked to play their part too.

Whilst we are being to told to stay at home to save lives, how can empty properties be viewed, surveyed, deals completed and fits out undertaken? The 2008 empty rates changes were essentially a penalty to try and bring properties back into use but never envisaged a pandemic. It seems to me now wholly inappropriate to charge empty rates during these times of crisis. Whilst I’d like to see them scrapped, I’m a realist. Surely, as a minimum, empty rates should be scrapped for retail, leisure and hospitality properties for the 2020/21 tax year to bring some form of parity with occupied properties in those sectors?

But looking at the bigger picture, and having regard for the upcoming review of the system that will take place, now is actually a really good time for the Government to recognise that the current three and six month exemption periods are woefully inadequate to allow commercial properties to be marketed and legal agreements completed let alone in a time of crisis and the impact that the crisis is likely to have moving forward.

With over 20,000 shops now being forecast to close for good in 2020, up by about 4,500 on last year, as occupiers evaluate their estates to trade successfully moving forward, Coronavirus will add yet further financial pressure on owners with longer term pain to come.

I’m not naïve enough to think that empty rates will be scrapped completely but the time is long overdue that they be modernised and made fit for purpose.

No property that becomes vacant as a result of this awful deadly virus and which cannot be re-let despite best endeavors should not have to pay punitive empty rates during 2020/21. It is not a big ask given the role landlords are being asked to play.

It is now time for the Chancellor to acknowledge the important role that the commercial property sector plays in the U.K. economy and ensure it thrives moving forward.

Robert Hayton is Head of U.K. business rates at the real estate adviser, Altus Group


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