Retail landlords charged nearly £1bn in rates on empty shops

Empty rates see landlords only exempt from business rates on empty buildings for just three months

Retail landlords have handed over almost £1bn to English Councils in business rates since the onset of the pandemic despite the current holiday, research from the Altus Group has found.

The government, which has invested more than £280bn in business support during the last year, gave premises in those sectors most adversely affected from the economic impact of coronavirus like retail, leisure and hospitality a complete business rates holiday for 2020/21 writing off property tax bills.

However, Altus said it has emerged that the holiday didn’t cover those properties vacant and to let, with the exclusion leaving landlords with tax liabilities of £924m this current financial year for their empty shops.

Altus added that empty rates are a “penalty” to try and bring properties back into use quickly with landlords only exempt from business rates on empty buildings for just three months. After this time most landlords must pay full business rates, although some properties can get extended empty property relief like industrial premises.

Robert Hayton, UK president of Property Tax at Altus Group, said: “The acceleration of the structural changes taking place across our high streets and these seismic changes to the fabric of the retail sector mean that empty rates are ripe for modernisation as part of the Treasury’s ‘fundamental review’.

“Rate free periods need to be extended to reflect the time that it actually takes to re-let vacant properties. Failure to do so will stifle investment in our communities.”

Altus predicts that the acquisition of the Debenhams and Arcadia brands by Boohoo and ASOS is likely to see all 562 stores across the UK become vacant and to-let with landlords potentially having to face annual empty rates of £50m for Debenhams and £91m for Arcadia Group stores after the short exemption period unless new tenants can be found once possession is taken back.

It comes as The Centre for Retail Research said around 358 retail stores each and every week will close during 2021 forecasting that a further 18,620 will close this year an expected increase of 18.2% on the 2020 calendar year.

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