Real Estate Update: The New Rates Trap

Section 32 of the Local Government Reform Act 2014 ("the 2014 Act") introduces two important amendments to the law. First, it has the effect that assignees of rateable property are no longer automatically liable for rates arrears of the previous tenant and instead, rates must be discharged by the assignor ("the Liability Crystallisation"). Second, it introduces a new notification obligation on an owner of rateable property where there has been a transfer of any interest in that property and imposes a penalty where there is a failure to notify and the rates are not discharged by the assignor ("the Notification Obligation"). These amendments will have a significant impact in the commercial property sector, particularly on landlords and receivers. This article explores the impact of these changes.