United Kingdom
Boosting the property industry
Issues
Rates on empty properties
The Government has announced that it will extend the temporary increase in the threshold for empty property rates for a further year.
Empty commercial property with rateable values up to £18,000 will be exempt from business rates until (at least) 5 April 2011.
Alternative Finance Arrangements
The Government has confirmed that it continues to be committed to aligning the treatment of alternative property finance arrangements to that of conventional loans.
Guidance will also be forthcoming on the VAT treatment of Islamic bonds.
SDLT holiday over
Unfortunately it is not all good news and as expected the ‘holiday’ from stamp duty land tax (SDLT) for residential property where consideration is less than £175,000 will end on 31 December 2009. After 31 December the SDLT threshold for residential property will revert to £125,000.
Comments
We welcome the extension of the relief for empty commercial property (a £3,000 increase in rateable value) as it allows property owners more time to locate tenants or sell their properties.
Unfortunately, since the rateable value is capped at £18,000, the relief is likely to be of limited value and will have limited impact in certain regions of the country. We note that the Government has stated that some 70 per cent of all empty properties will, as a result of this measure, be exempt but this is rather a misleading statement insofar as it adopts a very wide measure of what constitutes an ‘empty property’.
The Government’s continued commitment to Islamic Financing and Alternative Finance Arrangements is to be welcomed and the initiative is in line with developments in other G20 economies.
Whilst it is a disappointment that the stamp duty holiday for residential properties was not extended beyond 31 December 2009, this relief has proved to be a useful catalyst in increasing overall transactional activity within specific sectors.