Property lawyers from Sheffield are urging developers and landlords to throw their weight behind a new petition to get the government to scrap plans to raise rates on empty properties.
The call comes from Irwin Mitchell’s real estate team, which says the levying of empty rates is hurting development and stalling new business growth.
Associate solicitor Thomas Hall said: “Being required to pay full business rates on empty premises is a serious problem for developers and landlords, exacerbating the issues that many are already facing in the current economic climate.
“With money tight for many companies, being forced to expend further money on tax on their empty buildings means that this money cannot be used for other business purposes such as research and development, staff hires, or to fund growth.”
Mr Hall says some developers are taking even more drastic action to reduce their empty rates liabilities.
“There is clear evidence of empty buildings, particularly those nearing the end of their useful life, being torn down early rather than offered to the market on short leases.”
Rates relief on empty commercial properties was severely curtailed in 2008.
Until then, landlords paid no business rates on empty industrial property buildings, while those owning offices and shops paid no rates for three months and then paid half the full rate.
Following a review, rules were changed so that owners of empty industrial properties pay no rates for six months and then pay full rates, while owners of shops and offices pay no rates for three months and then pay full rates.
Initially, the Government allowed “targeted relief” for empty properties with rateable values below £18,000. From April the threshold was lowered to £2,600.
According to the British Property Federation, the change will cost businesses an additional £400m a year.
Irwin Mitchell says the reduction in targeted relief will mean more developers and landlords will be forced to consider whether to demolish empty buildings as they may not be able to afford to pay empty rates.
It believes this will particularly affect older buildings, which landlords have, in the past, been more willing to let at lower rents or on flexible terms, which made them ideal for small or start-up businesses.
Removing this kind of property from the market means smaller enterprises have much less choice of premises and may find the cost of available premises too steep to survive, it says.
Imposing rates on empty buildings won’t just result in the existing buildings being demolished, but could also mean developers will think twice about starting new speculative schemes, it adds.
Irwin Mitchell is urging developers and landlords to make their feelings known to the Government by signing a new petition, launched by the British Property Federation, which calls on the Government to reverse its decision to lower the empty rates relief threshold.
“We urge businesses to support the BPF’s petition and believe our clients would generally welcome a move back to the pre-2008 position on business rates as a catalyst to development of a large number of new schemes and as a fillip to wider economic growth as a result,” said Mr Hall.
The petition is at https://submissions.epetitions.direct.gov.uk/petitions/318.