Press release

BPF STEPS UP PRESSURE OVER EMPTY RATES

Date

26th March 2008

Description

The BPF has stepped up pressure on the government over plans to cut rate relief on empty property next week.

The BPF has signed a letter sent to the chancellor by the BCA, RSA, RICS and CBI (below). Liz Peace, the BPF's chief executive, also appeared on the Today Programme this morning to discuss the issue (clip below).

Business leaders have made a last ditch effort to make Alistair Darling shelve tax grabbing plans that could severely damage regeneration and small business.

In his Budget speech, the chancellor abolished rate relief on empty property from 1 April, a move slammed by the British Property Federation (BPF) as irresponsible and likely to impose a severe burden on businesses at the worst possible time.

Previously, the rate relief had encouraged investors to redevelop run-down areas.

Few office or retail developments can open with every unit let. Indeed, much of Canary Wharf was empty for years. But this new blow to business will be one tax too far for many. Poorer areas in need of regeneration schemes will suffer hardest, as they pose the greatest financial risk for businesses.

Regeneration doesn't just benefit local communities through housing and jobs. All those with pensions benefit too, as pensions generally have a percentage tied up in commercial real estate.

The government expects to rake in £1bn a year from this move. However, officials did not properly consult the property or business industry on the detrimental effects and unintended consequences of the policy, despite Gordon Brown's promise of 'open government'.

And while the cut in business rate relief may help balance the books initially, with regeneration schemes likely to be axed, this will mean less business, less jobs and ultimately less contribution to the economy in the long term. As speculative development dries up, the bill for essential regeneration and infrastructure developments will be left at the door of the taxpayer.

From 1 April, should a shop or office remain unlet for more than three months, full business rates will be payable; for warehouses the cut-off is six months. Clearly it's not in anyone's interests to leave property empty, and the BPF believes that Treasury officials do not fully appreciate the level of risk involved for investors who engage in regeneration projects. Britain's cumbersome planning system makes it hard enough to deliver projects on time and on budget, without this additional financial burden.

In the letter sent to the chancellor today, the industry said it believes the government has wholly misunderstood and underestimated the detrimental effects upon the business and investment industries.

The BPF wants the government to either delay the removal of relief from empty property business rates whilst it undertakes proper consultation, or reduce the permanent Empty Property Rate from 100% to 50% as per government's powers enacted in the Rating (Empty Properties) Act 2007.

Liz Peace CBE, chief executive of the BPF, said: "This is a disastrous move that could have consequences far beyond the lifespan of this government. Despite all the talk of open government, this ill-conceived move has been brought in without fair and proper consultation. There is a clear lack of joined up thinking between the Treasury and Communities departments, and ministers must understand the financial risks that private firms take to regenerate our towns and cities.

"Cutting rate relief will be a major blow for those striving to deliver sustainable communities. It's in no one's interests to leave property empty, but the realities of the current market mean that new developments will see a certain percentage of vacancies, and it's unfair that those very investors prepared to deliver government policies should be penalized, and ultimately priced out of regenerating our country."

www.bpf.org.uk

For enquiries contact the Andrew Teacher, media manager at the BPF on 020 7828 0111 or 07968 12 45 45 or ateacher@bpf.org.uk

Downloadable documents

Letter to the chancellor from BPF, CBI, BSA and RICS - 4MB.

Today Programme - Liz Peace discussing empty rates - 3MB.

Five Live Wake Up To Money - Liz Peace discussing empty rates - 3MB.