Empty property tax needs urgent ‘reconsideration’

28 October 2008

The government has been called on to rethink the rates that are charged on empty business premises.

The British Property Federation (BPF) has written to the Prime Minister, Gordon Brown, asking him to reconsider the tax currently applied to unoccupied commercial properties.

Changes introduced in April saw the abolition of rate relief that previously covered empty offices and factories.

Before April, empty retail premises were exempt from rates for the first three months and paid only 50 per cent thereafter. Industrial properties were wholly exempt.

Now unoccupied offices and shops are liable to 50 per cent of business rates for the first three months they are empty and the full charge thereafter, while industrial premises pay 50 per cent of rates for the first six months and the full amount after that.

The BPF has said that the charges encourage firms to pull down empty premises in order to save money.

The tax is also putting businesses under increasing financial pressure, the BPF argued.

Liz Peace, the BPF’s chief executive, said: “Taxing hardship and business failure is a ludicrous way to help people through the hard times. Brown must act now to undo this mess.”

In its letter, the BPF called on the government to re-introduce full relief from business rates on all premises for the first three months they are unoccupied, with retail properties paying 50 per cent after and industrial units enjoying continued exemption.

The letter said: “Scrapping relief on empty property is having a crippling effect on the UK economy, and particularly the property, retailing and manufacturing sectors.

“In addition, it is also hampering regeneration by preventing development and will have a damaging effect on pension fund holdings in property which have already been hit hard by the current economic downturn.”

A Treasury spokesman responded by saying that “the reforms to empty property relief are aimed at ensuring a fairer balance between incentives to re-let property, and giving property owners a period of relief while they manage vacancies” but that, as with all taxes, the position is being kept “under review”.