Home » Commercial » Brown’s empty rates ‘compounding recession’ say Tories

Brown’s empty rates ‘compounding recession’ say Tories

Big brands like Woolworths, Zavvi and JJB closing stores has left landlords with thousands of empty shops, while smaller firms wishing to cut back on their space in an attempt to survive or preserve jobs, have been prevented from doing this by having to pay full business rates on empty space.

While owners can demolish buildings, those who simply hold the lease cannot. No one wants firms to needlessly be propped up, but empty rates is like making the unemployed pay income tax, as something earning no income is being taxed.

ASDA’s Jonathan Refoy, said: "We are doing everything we can to help people through the recession but empty rates 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."

Caroline Spelman, Shadow Secretary of State for Communities & Local Government, said: "At a time when local firms are trying to weather the storm of an economic downturn, the last thing they need are even higher business rates. The combination of empty property rates, the end of transitional relief and an inflation-busting 5% rise in the multiplier, have had a toxic effect on local economies.

"Gordon Brown’s taxes are compounding the misery of the downturn and hindering the regeneration that would help lead the country out of his recession."

BPF chief executive Liz Peace, said: "We urge the chancellor to reinstate empty rates relief at least while we’re in recession. We’re not asking for a tax handout, but we simply must ensure that we don’t force businesses under and that more jobs aren’t needlessly lost because of a tax policy thought up during a property boom.

"Pressing on with empty rates will cost the Government a lot more in the long term than it will raise in the short term. Firms demolishing property, laying off staff or closing down is bad news and empty rates will draw out the downturn for many. Taxing something making no money is like making the unemployed pay income tax."

Redundancies are becoming more common as companies look for the funds to finance the tax while 15% of shops are estimated to be empty over the next few months.

CBI deputy director general John Cridland, said: "Extra taxes on empty buildings are damaging business. The emptyrates.com website forces the Government to confront this fact. Reintroducing the previous reliefs would help business deal with the recession. Rates on empty property have forced companies to cut staff, and can make the difference between surviving the downturn and going to the wall."

Under the new rules introduced in April last year – according to Gordon Brown to stimulate swifter lettings – buildings no longer qualify for half rates after the first three months of being unoccupied, or six months for factories and warehouses. Now, full rates are payable, and are proving too much for some businesses to bear.

The tax was introduced to stop speculative buying up of properties, but with property values falling 40% there can be no argument of this happening.

Demolition of buildings has been seen – about 15 million sq ft of space is thought to have been scrapped nationally in the past 12 months. Redundancies are becoming more common as companies look for the funds to finance the tax while 15% of shops are estimated to be empty by Christmas.

Stephen Robertson, director general of the British Retail Consortium, said: "The irony is a third of what the Chancellor gains in extra business rates will be lost to him as a reduced retail sector delivers lower amounts of other taxes and the benefits bill rises.

"Alistair Darling must use his Budget to announce an immediate freeze on all new business rate burdens and the reinstatement of empty property rates relief."

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0 thoughts on “Brown’s empty rates ‘compounding recession’ say Tories

  1. Robert Gibson says:

    “All spin and no substance” – is how Jerry Schurder head of business rates at Gerald Eve which advises 40% of the FTSE 100 on property matters dismissed the UK budget.

    The Chancellor passed up the opportunity to make a real difference to businesses by making meaningful changes to the business rates system, in place of the previously announced ‘soundbite savings’.

    The Government’s stated reasons for removing empty property rates relief, whilst questionable in a boom period, have simply no validity in a recession. Moving the exemption for 2009/10 from RV £2,200 to RV £15,000 as announced in last November’s pre-Budget Report merely tinkered at the edges and did nothing to assist those facing the largest empty property rates bills. EPR is a tax on business failure and the lack of reform in the Budget will lead to more businesses going under and will further deter regeneration projects. Even when those green shoots do eventually appear, no developer is going to commence a scheme if there is a risk of having to pay rates whilst seeking an occupier.

    And it is becoming increasingly clear that the Chancellor’s announcement at the end of March that businesses would be able to defer 60% of the increase in this year’s rates bills, is of marginal benefit to businesses and many will simply not be willing to jump through the administrative hoops in order to qualify. The Chancellor ought to have used the Budget as the opportunity to announce that 60% of the increase would be cancelled, not just deferred – but as a minimum he should have ensured that all businesses would automatically receive reduced rates bills with the increase being deferred. Instead, businesses are having to pay the full increase until the Summer, possibly longer, until new Regulations have been enacted, and will then need to apply individually for each property if they wish to defer part of the increase. And this from a Government that claims it is reducing red tape!

  2. The tax on empty properties can be legally mitigated if a short term occupier is put in the property. Intermittent occupation is a legitimate way of reducing the negative effects of this bad tax and in doing so can help to make space available on a flexible low cost basis.
    David Flood
    Rateable Value Ltd
    Support our petition to extend the rates void period to twelve months at http://petitions.number10.gov.uk/extendEPRvoid/
    For more information you can visit our website at http://www.rateablevalue.co.uk
    Also see the Empty Rates Website at http://www.emptyrates.com