Empty property tax encouraging ‘pre-emptive demolition’

27 August 2008

The government’s decision to scrap rate relief on empty commercial properties is having an adverse effect on city landscapes, it has been claimed.

The warning has come from one of the government’s advisors on efforts to create thriving inner city environments.

John Nicholls, who chairs a group that represents government-sponsored urban regeneration companies (UCRs), has argued that imposing full business rates on vacant properties is encouraging owners to demolish buildings and developers to leave projects unfinished rather than pay the tax.

Mr Nicholls said: “There is a lot of pre-emptive demolition going on. This is already having a visual impact – cities are beginning to look like broken teeth.”

There have been knock-on consequences for jobs and new homes, Mr Nicholls added.

Changes in the Budget mean that full business rates apply to empty commercial property after three months and to industrial units and premises after six months. Previously, vacant offices and shops enjoyed relief of 50 per cent and industrial buildings 100 per cent relief.

Opponents of the measure maintain that the abolition of the relief is endangering city centre redevelopments that require complicated and lengthy periods of planning.

The Treasury responded by saying that the decision to drop the relief was based on recommendations made in independent reviews, the intention being to speed up the process by which empty premises are brought back into use.

A spokesman said: “Reforms to empty property relief are aimed at ensuring there is a fairer balance between incentives to re-let property and giving property managers a period of relief while they manage vacancies.”

However, the UCRs believe that warnings over the possible consequences of the changes to tax, delivered to the government almost a year before the relief was scrapped, were ignored.