Government To Change Threshold In April

The approach that landlords take towards tenants who are struggling to meet rent payments may change when empty rates relief on small commercial properties is abolished, a lawyer at Irwin Mitchell has suggested.

It has been revealed that the threshold for properties to be exempt from paying business rates will drop from a rateable value of less than £18,000 to £2,600 at the start of April.

According to communities minister Bob Neill, allowing the current rate relief threshold to remain in place would cost the government £400 million a year.

Organisations including the British Property Federation have criticised the move, suggesting that it is a “retrograde step” that will impact on a private sector-led economic recovery.

Commenting on the plans, Danny Revitt, Head of Property Litigation at Irwin Mitchell, said the decision could have an impact on the behaviour of landlords in the market.

He explained: “The announcement is likely to increase the instances of landlords being forced to allow tenants who are not paying their rent, or may even be insolvent, to remain in occupation of their premises rather than forfeiting their leases.

“This is because landlords may be keen to simply avoid having to take on the liability for rates, especially where there is no demand for the premises.”