NEIGHBOURHOOD WATCH
WHAT A RELIEF? Government’s empty rates relief ‘designed not to be used’.
In its response to this summer’s property rates consultation, the British Property Federation (BPF) has said the hugely complex proposal appears designed to be hardly ever used and gives the illusion of a government doing something to support the sector.
Announced by George Osborne in last year’s Autumn Statement as a means of stimulating construction, the property industry has been left disappointed by the limited scope of the Government’s proposals and concerned they will have little or no impact unless the scope of the relief is widened to include redevelopment and refurbishment.
“The proposals are a complete waste of time and deeply flawed.”
The Government has proposed extending relief from empty property rates. However, it applies only to new properties built between 1st October 2013 and 30th September 2016, is only given for up to 18 months, and is limited by EU State Aid rules (roughly £55,000 a year). Also, it can only be granted at the discretion of local authorities.
The BPF has argued since 2008 that the rise in empty property rates has had a damaging impact
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on businesses, jobs and the wider UK economy, as it creates a strong disincentive for property companies to develop new space, and causes empty buildings to be demolished instead of refurbished. The BPF has pushed for a complete reversal of the policy, believing it would result in only a minimal loss to the Exchequer given the additional economic activity that empty rates reform would generate.
Liz Peace, Chief Executive of the British Property Federation, said: “The relief is so limited and needlessly complex that 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 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.”
Jerry Schurder, Head of Rating at chartered surveyors, Gerald Eve, said: “Now that we can see the full extent of the proposals, it’s clear that they will not actually have a positive impact on development conditions
in England, but instead will do little more than give the illusion of a government doing something to support the sector.
“Rather than come up with proposals that would genuinely encourage the return of speculative schemes, especially in the regions, the planned grace period will instead do next to nothing to stimulate development. Unviable or borderline schemes costing millions are not suddenly going to be given the go-ahead because of the reduction of a potential empty rates risk by around £55,000 per year for up to three years. The proposals are a complete waste of time and deeply flawed. At the same time, making the relief available at the discretion of local authorities adds another level of uncertainty to the process.”
You can view the consultation here. RELIEF PROPOSALS
• Exemptions for all newly built commercial property (completed between 1st October 2013 and 30th September 2016)
• Relief given for up to 18 months
• Limited by EU State Aid rules (roughly £55,000 a year)
• Granted at the discretion of local authorities
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