The ending of rate relief on empty business premises could have an adverse effect on the regeneration of the country’s most economically deprived areas, it has been claimed.
David Frost, the director general of the British Chambers of Commerce (BCC), has expressed concern at the abolition of tax breaks on empty offices, shops and industrial premises.
Mr Frost said: “The relief was an incentive for businesses to bring empty commercial and industrial property back into use and it has benefited many of the poorest communities.
“At a stroke, the government’s new policy will hit disadvantaged areas and create financial insecurity for companies currently in possession of empty properties. This is little more than another tax hike on business.”
The government ended business rate relief on empty properties as from 1 April.
Until then, empty commercial property, such as office and retail properties, received 100 per cent relief from paying business rates for the first three months, and were only liable to a 50 per cent rate thereafter. Empty industrial properties, such as warehouses and factories, received a permanent exemption from rates.
But the government has argued that it is not possible to justify offering tax reliefs for buildings to sit empty while UK rents are among highest in the world.
As a result, from 1 April empty commercial property is liable for the full business rate after an initial rate-free period of three months, or six months in the case of factories and warehouses.
Charities, community amateur sports clubs and companies in administration will be granted a complete exemption from rates on their empty properties.
John Healey, the Local Government Minister, said: “No-one wants to live or work in a ghost town of empty offices and closed-down shops. These changes will help bring empty buildings back into use, reduce rents for small independent shops and create thriving high streets and town centres.”
However, other business groups have also attacked the measure.
The British Retail Consortium (BRC), the British Property Federation (BPF) and the British Centre Association (BCA) have argued that Mr Healey is ignoring the basic principle that a property owner needs to lease out their property in order to make their business work.
Stephen Robertson, the BRC’s director general, commented: “No one gains by keeping property empty. It’s unoccupied because there isn’t the demand for it at that time and place. Piling on taxes will not conjure up new tenants or drive down rents but will weaken the prospects for local regeneration.”
Date:2 April 2008
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