Pubs face rates hit

A new bill could penalise licensees who close for refurbishment by making them pay full occupying rates.

As the law currently stands, licensees can ask the council to hold off rates while work on the property is completed.

The bill is part of a general Government initiative to discourage property owners from leaving buildings vacant for prolonged periods of time.

Minister for Local Govern-ment & Community Cohesion Phil Woolas, who published the new measures, said: "No one wants to live or work next to an empty property, and it is frankly daft for the state to subsidise it when commercial rents are so high."

Jerry Schurder, of chartered surveyors Gerald Eve, said: "Greater focus and emphasis is likely to be placed on local authorities to take a harder line on empty businesses. This will make it harder for licensees to get rate relief."

Another part of the bill, called the anti-avoidance measure, is designed to deter construction vandalism (when property owners purposefully damage their buildings to reduce rates) and will levy rates against a property in disrepair based on the original rateable value

of the property.

This could pose a serious problem for pubcos and private operators who have no choice but to leave a business closed.

The Chancellor is set to gain £950m a year from the plan, prompting accusations by some that it may be a poorly thought-out tax grab.

Schurder said: "It's a knee-jerk solution to a possible problem that's been implemented without adequate thought. They're trying to change a property value rating system that has been in place for hundreds of years."

Schurder advises licensees considering a refurb that it might be a good idea to do the work sooner rather than later.

"If it's feasible, it might well be worth carrying out work to avoid paying rates on non-trading businesses, before the proposed legislation comes into force in April 2008."