Many commercial mortgage holders 'could be affected by rate hikes'

25 January 2011

Written by Simon Whittaker

Commercial mortgage holders are to be hit by the scrapping of business rate exemptions for empty properties with a rateable value of under £18,000 and new research has indicated as many as 990,000 assets could be affected.

The study, conducted by chartered surveyor RatesRecovery, showed many portfolio investors could see extra costs of up to £7,800 per property per year when the changes are brought in on April 1st.

From this date, the only business real estate assets that will be excluded from the charges are those with a rateable value of £2,600 or lower.

Director at the organisation Nick Wright warned the changes to policy would "hit the poorest areas hardest" and the private landlord market could "suffer very badly".

"A significant number of landlords will be faced with substantial rates bills," he explained.

He went on to say that underprivileged areas already suffer from high vacancy rates and low demand for commercial properties.

Meanwhile, the economy could suffer as many people build their pensions around real estate investments, Mr Wright said.

The Federation of Small Businesses recently called on the government to review its decision to lower the exemption threshold, arguing the change could force some firms into insolvency.

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