Pressure builds on Coalition to act on its words over empty property rates

June 14, 2013 5:24 PM

A leading expert in the field of Business Rates has slammed the Coalition’s half-baked proposals for empty property rate relief. Jerry Schurder, partner at a leading chartered surveyors and former President of the Rating Surveyors’ Association said they were "a waste of time and deeply flawed."

At the Autumn Statement, George Osborne proposed that all newly built commercial properties should be exempt from empty property rates for 18 months. A damp squib, considering how vociferously senior coalition figures opposed the tax in opposition. Business Secretary Vince Cable described penalising property owners for their properties being vacant a "a ludicrous situation, completely counterproductive and economically very damaging."

The recently published proposals reveal that the exemption period for new build developments will be at the discretion of local authorities. This adds to the many uncertainties developers face when weighing up whether to proceed with a project.

The scheme will also be subject to European State Aid rules which limit each company to a total benefit of £170,000 (€200,000) over a three year period. A limit like this is far too small to provide any meaningful incentive for large developments.

The construction sector has been one of the worst hit since the financial crisis, and is being held back by a combination of empty property rates and restrictive planning regulations which form a destructive cocktail, discouraging development

Our research earlier this year showed that the Treasury raked in more than £1.1 billion from landlords struggling to find tenants in 2011-12. The ineffectiveness of the current policy has also been demonstrated by a survey from the Royal Institution of Chartered Surveyors, which showed an overwhelming consensus that the policy has been ineffective in reducing rents and incentivising landlords to let out property.

The Government needs to radically rethink these feeble proposals if they are to have any impact, and at the very least offer the relief that was available before Gordon Brown removed it.

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