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BPF launches website to track property tax chaos

The BPF, a trade body for property, wants the relief put back to how it was a year ago when Gordon Brown scrapped it. The website – backed by the likes of ASDA, Tesco, EDF and AXA and the CBI – will catalogue the effects of the tax and allow people to tell their own stories.

The Government removed the relief from business rates for empty commercial space last April and has pressed on despite the recession and the fact that 15% of retailers are likely to go bust this year, leaving swathes of empty shops.

Before 1 April last year, empty offices and shops were liable for half their rates bills while industrial units paid nothing. Since then they have been taxed the full amount, despite the lack of income.

In spite of worsening conditions, business secretary Lord Mandelson claimed that empty rates were "good for business". The Government responded to BPF pressure with a concession in last November’s pre-Budget report offering a one-year holiday for tiny properties – those with a rateable value below £15,000.

Chancellor Alistair Darling claimed to be helping 70% of property owners with the exemption, but the BPF said that the truth was that it was just spin. This figure was greatly exaggerated by including ATMs, public toilets and car park spaces. The Government later admitted this change would only hand back 20% of what they would have collected.

The BPF has insisted that property owners are not asking for bailouts, simply stating that those with property they cannot fill because of the recession should not be doubly punished.

Because complex and costly regeneration projects often require firms to buy up properties and hold on to them while they acquire other nearby sites, empty rates means that there is an extra tax burden on these schemes at the worst possible time.

The risk of newly-developed property remaining empty for longer (because of the recession) and at higher cost (because of empty rates) makes many regeneration projects even less attractive. With margins squeezed and property prices falling, empty rates are causing regeneration projects and vital new investment in communities to be killed off. Big players in regeneration, such as ASDA, are finding empty rates a significant barrier to further investment in the current downturn. The BPF said that homes, schools and health centres were not being built because of the Government’s short-sighted approach.

Empty rates have also led to the demolition of an estimated 15 million sq ft of property, razed to save businesses large and small from an additional cost that they cannot bear in the current market. Even the biggest brands – like ASDA and Legal & General – have admitted flattening buildings, while individual post office owners forced to close by Gordon Brown have also been hit with empty rates bills.

Pensioners, encouraged by the Government to invest in property to provide for their retirement, have seen their investments turn to liabilities. Meanwhile, those with investments in pension funds – such as PruPIM or Axa – will also reap lower returns because of the tax. Funds have begun to pull cash out of property assets despite the solid income returns that tenanted property can deliver because of this.

And employers who may have been able to save jobs by reducing property costs have been forced to lay people off, since empty rates has meant that cutting back on space would actually cost them money. The BPF said that with employment rocketing past two million, it is yet another damaging consequence of empty rates ignored by a Government that is supposedly "committed" to helping business.

The website features comments from politicians and businessmen and allows evidence to be submitted to local MPs and the BPF. It also acts as a resource for anyone wishing to see just how bad the situation is.

Boris Johnson, Mayor of London, and Ian Luder, Lord Mayor of London have both expressed their opposition to the tax.

Liz Peace, chief executive of the BPF, said: "While property is a fundamental driver in our economy, we’re not asking for any bailouts, we just want fairness and taxing empty space is simply not fair. Any tax take which increases as income goes down is fundamentally wrong. Empty rates isn’t just hitting big firms, it’s hitting individuals, killing off people’s investments and reducing the economy’s capacity to recover. With every passing day Gordon Brown and Lord Mandelson are digging a bigger hole for us to climb out of.

"Making firms face the double hit of recession and then a tax on that recession will simply make things much worse, and that’s what we’re seeing. Demolitions will continue, new investment won’t happen and the misery of thousands of hard-working individuals will be heightened."

Jonathan Refoy, Head of Property Communications at ASDA, said: "ASDA believe, as others, that empty rates are an unfair tax and ill timed. We are doing everything we can to help people through the recession by providing great value products, creating employment and investment in communities.

"Empty rates, however, are making this much more difficult. Instead of investing in regeneration and jobs, we have to pay this unfair tax on vacant properties that we cannot let or redevelop in the current market. This tax is an anti-regeneration measure."

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2 thoughts on “BPF launches website to track property tax chaos

  1. Derek Jones says:

    Nice try everyone, but get real. This Government won’t willingly backtrack on this tax, and if they are forced to do so, they will simply find another victim and impose another tax.

    The fact is, this Labour government is just a reincarnation of all the previous ones: high spend, high tax, high wastage. Few politicians today are in the business for anything other than personal gain, as we see this week from exposes on expenses. But Labour beats them all for its legalised corruption and squandering of our hard-earned money.

    If the gullible, short-memoried electorate of this country is stupid enough to vote them in yet again next year, they deserve everything they get. And any decent, hard-working entrepreneur would be better served by finding another country in which to operate. That’s what I shall be doing.

  2. John Keeble says:

    Perhaps BPF should poll its members to see if there is any support for collectively witholding the Tax and if so present this to the Government? It might provide the stimulus for HMG to reconsider the tax, especially in areas of adverse impact, for no tax which is so manifestlly unjust should be tollerated – as a former Government learnt to its cost over the proposed introduction of the Poll Tax.

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