Removal of Empty Property Rate Relief is costing Small Firms

Small Business News

The British Property Foundation (BPF) has called on the Government to re–introduce rate relief on empty commercial properties, as its decision to remove it is penalising small firms.

The Government removed commercial property rate relief on empty premises in April this year, in an effort to force landlords to find tenants for empty buildings and regenerate properties.

However, according to the BPF, the removal of the relief means that property owners who are unable to find tenants are demolishing buildings rather than paying the full rate, while regeneration projects in deprived areas are being shelved because of the risk of higher costs during vacant periods.

The BPF also expressed concern that a lack of supply of commercial property will lead to higher rents in the long term.

“Small businesses in particular are being penalised unfairly,” said BPF spokesman Andrew Teacher. “We are urging the government to put the relief back to 50 per cent, which it is able to do within the existing legislation.”

Since the law changed on April 1, landlords now have to pay the full business rate on empty retail and office property, following a three month grace period – previously they received 50 per cent tax relief.

Landlords of industrial space now have to pay the full rate after six months, unlike before, when they had full tax relief. The British Chambers of Commerce (BCC) has supported the BPF campaign to re–introduce the tax relief. According to BCC spokesman Sam Turvey, the new ‘empty premises tax’ is slowing down an already weak property market.

“Developers are reluctant to be involved in commercial property investment and regeneration schemes,” said Turvey. “We are seeing an increase in demolitions of useable buildings and serious financial problems for companies facing the new rate.

“In the worsening economic climate, these changes are compounding the current financial difficulties,” he added. “Small businesses have been very vocal about this issue and we urge the Government to rethink the tax.”

A Government spokesperson was not available for comment.