Empty rates anger as government refuse to back down

As the government plans to invest £10m to help the country's bees, the property and retail industry is making a last ditch plea for the scrapping of Gordon Brown's empty property rates tax

It comes as the campaign website set up by the British Property Federation (BPF) reveals the shocking truth about how the recession tax is also forcing Regional Development Agencies, and a host of health and education bodies to waste millions of pounds of public money paying empty rates.

Business secretary Lord Mandelson warned that firms should not expect much help in the Budget 2009 and his prediction was realised. “Many business sectors are coming together with needs and requests for support,” he said.

“The government should not passively soak up the demands. It needs to think through its own priority for what support should be allowed to businesses.”

Meanwhile, an announcement by Environment Secretary Hilary Benn will unveil £10m of funding to help secure the future of the nation’s bees. Defra is itself paying more than £1,285,000 in empty rates. “Aristotle identified bees as the most hard working of insects, and with one in three mouthfuls coming from insect-pollinated crops, we need to support bees and other pollinators.” said Benn.

Back in the real world, 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.

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.”

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 percent of shops are estimated to be empty over the next few months.

Max Allen is a pensioner from Chatham in Kent with three empty units he bought ten years ago to fund his retirement. He said: “There is simply no way to get tenants in. It isn’t a case of even lowering rents, there is just no demand. Because of this recession, I cannot sell my properties and because of empty rates, I now face bankruptcy.”

Vic James, who ran a local DIY store in Halifax, said: “There is simply no way out. I’ve worked hard all my life and now I face the double misery of my firm going under and having to pay a huge rates bill for a shop I can’t use.”

The scandal over post office closures has also meant that many rural shop owners face ruin. Seven Welsh branches in the Vale of Clwyd and the Dee Valley were given notice to shut in October last year, as part of a round of closures across the country. They all now face empty rates bills.

Vanessa Williams, subpostmaster at the Henlland branch, said: “It’s appalling, absolutely disgusting. For the post offices that have had to close, and then to pay rates on an empty property, especially at this time, is not very good. These post offices didn’t have a choice to close. It’s not fair at all, but I must stress that it is not the Post Office who are asking for these rates.”

CBI Deputy Director General John Cridland, said: “Extra taxes on empty buildings are damaging business. The emptyrates.com website forces 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 percent, there can be no argument of this happening. Demolition of buildings has been seen – about 15 million square feet 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 percent of shops are estimated to be empty by Christmas.

Among the many critics of EPR are businesses, commercial property agents, developers, builders, the Conservative Party, which condemned the change as “immoral” – even Nick Brown, the Government’s Chief Whip and Minister for the North East, has waded into the row, speaking of the “destructive” effect he has seen in the region as a result of the rates.

Although Chancellor Alistair Darling attempted to broker a way forward, offering 12-month relief on properties with a rateable value of up to £15,000 in November’s Pre-Budget Report (PBR), his efforts were dismissed as being “woefully inadequate”. Regional MPs including Alan Milburn, John Cummings, Chris Mullin and Phil Wilson have urged Mr Darling to look again at the issue.

While the government responded by saying the exemption would benefit 70 percent of properties, the British Property Federation unpicked the spin to reveal that statistic included cash points, public toilets and car parking spaces. Statistics revealed that to qualify for the exemption, offices must be of between 1,000sq ft and 1,500sq ft of space, and industrial units of between 5,000sq ft and 7,000sq ft, figures which account for significantly less than the 70 percent figure. In London, it is around 30 percent.

The reality remains that thousands of businesses are being lumbered with costs they can barely afford to pay, but are left with little choice but to do so.

For more information
Contact British Property Federation at bpf.org or 020 7828 0111 or Email: info@bpf.org or visit emptyrates.com