The British Property Federation (BPF) has issued a stinging response to the government’s empty property rates consultation. The industry body says the proposal to extend relief on new-build properties will do little to encourage development and appears designed never to be used.
The measure was announced by Chancellor George Osborne in last year’s Autumn Statement and applies to commercial properties built between 1 October 2013 and 30 September 2016.
Eligible properties will be exempt from business rates for 18 months while the building remains empty. This includes the initial three or six month exemption that currently applies and is limited by EU State Aid rules to around £55,000 per year. In addition, it can only be granted at the discretion of the billing authority.
The BPF argues that empty property rates create a disincentive to developers and result in empty properties being demolished which might otherwise be refurbished. The organisation has called for a reversal in this policy which, it says, would have a positive impact on businesses, jobs and the wider economy while resulting in only a minimal loss to the treasury.
Chief executive of the BPF, Liz Peace, believes the latest proposal is ‘limited and needlessly complex.’
“It almost appears designed not to be used at all. That the government has dreamt up a new definition for a building, just to implement this policy, is a case in point.
“It will certainly do next to nothing to stimulate development. If the government is serious about boosting construction activity then the renovation or refurbishment of existing buildings must also qualify for relief.
“This is economically-productive activity that should be encouraged, not penalised through the tax system,” she says.
Jerry Schurder, head of rating at property consultants Gerald Eve, agrees that the proposal will not have the positive impact on development that its supporters believe. Instead it will do little but “give the illusion of a government doing something to support the sector,” he says.
Trevor Osbourne, of the Trevor Osbourne Property Group, argues that empty property rates penalise landlords who are already out of pocket through the loss of rental income.
“This itself is demonstrably unjust and results in the dilapidation of our towns and cities,” he said.
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