Empty rates tax causing 15m sq ft of commercial property to be demolished

Empty rates tax causing 15m sq ft of commercial property to be demolished


Most companies hit by the recession are trying to shave off costs, but for those in the property industry, even more drastic actions have to be sought at present in order to save money.

Whilst those in financial services have seen a recent abundance of redundancies and packed lunches, the commercial property sector is seeing a sharp increase in bulldozers and hard hats.

According to the latest figures from the British Property Federation, over 15m sq ft of commercial property has been demolished in the


due to the controversial empty rates tax.

From last April, the Rating (Empty Properties) Act of 2007 stamped out empty rate relief for


buildings. Now it stands that commercial property is eligible for 100% rates relief for only the first three months from the date it becomes empty before full rates resume.

Industrial properties are entitled to six months of 100% rate relief from becoming empty.

It would seem that companies view these empty sites as a drain on resources at a time when not much speculative development is taking place, therefore it often works out cheaper to destroy the buildings than pay business rates on them.

Recently, UK Land Estates flattened a former factory the size of two football pitches in


to avoid incurring the £186,200 a year it was being levied in business rates.

Despite pleas from the commercial property sector for the Government to remove the levy in the Budget, no relief was given last week.

Director of commercial real estate agency Atisreal, Paul Nicholson, commented: “If buildings remain unlet and incur disproportionate empty rates bills then we will see more instances of demolition.

“The Budget did not throw out a lifeline. As a result, the empty rates legislation will continue to be a burden on an already suffering property industry. The Government is effectively continuing with a ‘crisis tax’ which is being inflicted on those that are being crippled by the economic crisis – property owners, small family-run businesses, and those that have effectively placed their pension into properties are all penalised.

“The legislation serves no purpose other than to provide the Government with revenue.”


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