While there wasn’t much in the Spring Budget for the South West, there are plenty of changes coming that commercial property owners, occupiers and investors need to be aware of. April 1st is a particularly significant date with new laws coming into force.
April 1st 2023 – MEES Regulations
From April 1st 2023, it will be unlawful to continue to let a commercial property with an F or G EPC rating, even if the lease was granted before 2018 when the MEES Regulations came into force. This only applies to buildings which need an EPC so if you aren’t sure, please talk to our Surveying team who will advise you. The law applies to most leases including periodic, reversionary and renewals.
The penalties for breaches range between £5000 to £150,000 and the breaches are published so you may risk reputational damage too. Local authorities have been given funding to help them enforce the regulations so landlords are warned to resolve the EPC ratings as soon as possible.
It is widely anticipated that even more amendments are due, raising the minimum EPC rating from E to C by 2027, so landlords would be well advised to consider how they can raise the EPC rating to C while they are carrying out the work.
April 1st 2023 – New Rating List
The new Rating List comes into force on April 1st, with significant rises for many property owners and occupiers. The last date to check and challenge your existing rating valuation is March 31st 2023 and our rating team have been very busy with a last minute rush to claim refunds or adjust rating valuations. Since these claims currently go back to 2017, there have been some sizeable refunds going into many thousands of pounds. Rates can be complicated, so if you would like some advice please contact Jordan Kennedy, Head of Rating, as soon as possible.
Even if you miss the March 31st deadline to lodge your challenge, it’s still worth having your Rateable Value checked since you could be overpaying on incorrect assumptions about your property.
Real Estate Investment Trusts
From April 1st 2023, the new measure removes the requirement for a REIT to hold a minimum of three properties if it holds a single commercial property worth £20m or more.
The rule that deems the disposal of a property within three years of being significantly developed to be outside the property rental business will be changed so the valuation used when calculating what constitutes a “significant development” reflects property value increases.
Second home owners
From April 1st 2023, the owners of second homes who have been claiming their properties are holiday lets when they are not, will have to pay council tax rather than business rates. To qualify as a holiday let, owners will have to prove that their property was let last year for a minimum of 70 days and has availability for letting for at least 140 days in the coming year, to qualify for business rates.
We expect that this change will have a great impact in Devon and Cornwall, given the high number of second homes in the South West.
Vickery Holman are the leading property consultancy in the South West, with around 80 people based out of offices in Bristol, Exeter, Plymouth and Truro. Our services include commercial agency, building surveying, development, investment, property management, business rates and lease advisory. We also have the largest team of RICS Registered Valuers in the South West for secured and non-secured valuation work.
