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Government stands firm in row over empty property rates

Friday, 29th August, 2008

Government stands firm in row over empty property rates
The Government has insisted it has no plans at present to reverse its decision to scrap rates relief on empty industrial property, despite concern over the impact on regeneration.

John Nicholls, chairman of the chief executives' group of the Government-funded urban regeneration companies (URCs), has warned that owners are demolishing empty buildings to avoid paying tax on them. Parts of the UK now resemble bomb sites, he told the Today programme on Radio 4.

Nicholls said the change in the fiscal arrangements, which came into force in April, was "starting to affect the supply of much-needed new property and job-generating property in our urban areas".

He said that regeneration projects were being affected because developers were wary of assembling sites because of the risk they would be liable for empty rates on property they have accumulated.

Before the changes in taxation, vacant offices and shops received rate relief of 50 per cent while industrial units gained full relief. Now all unused commercial property has to pay full business rates after a three-month period of grace for commercial floor space and six months for industrial property and warehouses.

Nicholls said fellow chief executives from the country's 20 or so URCs had reported growing evidence of demolitions around the UK. It has emerged that the URCs warned the Treasury last year of their fears about the impact of the then plan to end rates relief.

The British Property Federation has mounted a high-profile campaign against the tax changes which has attracted Parliamentary opposition from some Labour backbench MPs.

In a statement the Treasury said: "The Government introduced the reforms to empty property rate relief to provide a strong incentive to owners to re-use or re-develop their properties which should increase the access to properties for business and should help reduce rents."

A spokesperson for Communities and Local Government said: "The Government is committed to regeneration which is why, in April last year, new rules were introduced for businesses investing in the economic development of disadvantaged or so-called Assisted Areas. Those businesses that invest in Assisted Areas can claim 100 per cent capital allowance for the cost of renovating or converting long term empty properties.

"We have no plans to reverse the changes to empty property rate relief introduced on 1 April, but as with all taxes we will keep the position under review."

Roger Milne

28 August 2008