Written - Changes to Non Domestic Rating Empty Property Relief

I have agreed that with effect from 1st April 2008 empty industrial properties will be entitled to 100% empty property rates relief for the first 6 month period and that from 1st April 2008 empty non industrial properties will be entitled to 3 months of 100% empty property relief.  

I will be making regulations to amend the Non-Domestic Rating (Unoccupied Property) Regulations 1989 to implement the changes for empty industrial property in Wales. This will remove their current exemption from paying rates after they have been empty for more than 6 months, and will make them liable to pay the empty property rate of 100%. No changes to regulations are required to implement the changes in respect of relief for non industrial empty property.    

The changes to the rate of relief for empty properties were made by the UK Government in the The Rating (Empty Properties) Bill 2007. This Bill effectively reduced relief for empty properties from 50% to nil % of the standard rate. It applied the changes to England and Wales, but gave the Assembly Government powers to make regulations to change the rate of empty property relief back to 50% or to any amount between nil% and 50%.  The Bill also exempts empty properties used by charities and sports clubs from paying rates.

The Bill includes powers for the Assembly to make anti-avoidance regulations to reduce the potential for owners to avoid paying the 100% empty property rate. I am considering what regulations may be necessary, and will undertake a public consultation in due course.  

The Barker Report on Land Use Planning published on 5 December 2006 recommended that the U.K. Government should make better use of fiscal incentives to encourage efficient use of urban land and, in particular, the reform of relief from business rates in respect of empty property. Subsequently, the report of the Lyons Inquiry, published on 21 March 2007, also recommended the reform and reduction of the existing reliefs from business rates in respect of empty property. Lyons rationale for the recommendation was the need to ensure that previously developed land was used more effectively to protect the environment and support urban regeneration.

In response to both Barker and Lyons, the Chancellor announced in his Budget Report of 21 March the Government’s intention to amend the existing system of business rate relief for owners of unoccupied property. Having made these changes in England, the UK Government would not continue to fund the current relief scheme in Wales, and had I not agreed to these changes the costs would have had to be met from other areas within the Assembly Government’s budget.

The Assembly Government believes that rate relief should be focussed on new and existing businesses, not on empty property where no economic activity is taking place. In accordance with our commitment in One Wales to enhance the business rate relief scheme and within the context of more effective support for businesses, I will be reviewing the small business rate relief and consulting on how best it may be extended to encourage further businesses that contribute socially and economically to their local communities, and to complement existing Government initiatives to promote economic growth and development.