Property matters

Industry integral in the battle against climate change

An announcement during Budget 2008 confirmed that empty rate relief, as well as other tax relief schemes important for developers, would go ahead as planned.
The Treasury commented that the removal of empty rate relief on commercial buildings from 1 April meant property owners would pay almost £3bn in extra tax in the next three years.

The rate relief change will see empty office and retail property pay full business rates after a three-month grace period and industrial buildings given a six-month grace period, calculated retrospectively from 1 April.
Industrial property owners will also see the phased abolition of capital allowances on industrial property, which could lead to a £675m tax increase over the next three years.

There was disappointment that lobbying for changes that would expand the Real Estate Investment Trust (REIT) regime were not mentioned in the Budget, although there was news in the form of confirmation about the changes to the authorised property investment fund regime, which will see authorised property funds given the same tax treatment as REITs.

A REIT is a property investment vehicle that benefits from certain tax advantages. A REIT is, by definition, a company that’s listed on a regulated investment exchange such as the London Stock Exchange and which owns income-producing property – either commercial or residential.

REITs were first launched in the UK on 1 January 2007 as a way of making it easier for investors to invest in UK commercial property, such as offices, high street shopping centres and out-of-town retail parks.

Mr Darling the chancellor in his Budget speech also confirmed that the property industry would be integral in the battle against climate change, with all commercial buildings to be zero-carbon by 2019, with a consultation on how to achieve this to be launched later this year.