Government moves to
prevent deliberate dereliction of empty shops, offices and factories
COMMUNITIES AND LOCAL
GOVERNMENT News Release (126) issued by The Government News Network
on 9 July 2007
Government's drive to revitalise our villages, towns and
cities by bringing empty shops, offices and factories back into
use continued today with publication of a consultation reviewing
business rates for empty properties
Launched by Local Government Minister John Healey, the
consultation seeks the views of property owners, developers,
surveyors and councils on potential reform of detailed aspects of
the empty property rates regime.
In particular, it will propose ways to tackle rate avoidance.
Most property owners do not deliberately vandalise their empty
property in a bid to avoid rates. However a small minority may be
tempted to render it incapable of economic repair to avoid paying
the rates by, for example, removing the roof.
It also examines the tax concessions for empty listed buildings
like shops, offices and visitor attractions and whether their
current exemption from the business rates can be justified.
Another area of concern is the current, possibly perverse,
incentive whereby companies in liquidation are exempt from empty
property rates while those in administration are not. Stakeholders
have expressed fears this could encourage insolvencies with the
subsequent loss of jobs and knock-on effect on supplier and
John Healey said:
"The modernisation of empty property
relief is a major element of a broad package of measures which
promote the efficient use of land and property, announced in the
"We've already acted to provide a stronger incentive
for owners to bring empty shops, offices, factories and warehouses
back into use - helping to revitalise town centres, reduce rents
for businesses and bring forward new opportunities for commercial
and housing development on brown-field sites. The Rating (Empty
Properties) Bill, has successfully completed its passage through
Parliament and awaits Royal Assent.
"Now, as promised during the passage of the Bill, we are
consulting fully on the issue of deliberate avoidance as well as
inviting comment on exemptions for listed buildings and possible
exemptions for properties owned by firms in administration"
Full details of the 'Modernising Empty Property Relief'
consultation can be seen on the Communities and Local Government
website at http://www.communities.gov.uk/index.asp?id=1511767
Notes to Editors
The Government is committed to promoting the
efficient use of land and property. It is therefore taking action
to modernise empty property relief from non-domestic rates to
provide a positive incentive to bring vacant shops, offices,
factories and warehouses back into use and to remove distortions
in the efficient operation of commercial property markets.
Owners of empty non-domestic property have been liable for
non-domestic rates since 1966. They currently qualify for
significant relief from rates, receiving at minimum a 50% relief
from the occupied business rate. Owners of empty industrial
premises enjoy a complete exemption from rates. This regime was
introduced in the 1980s during periods of economic recession and
low demand for property and land. In 2007-08 this tax relief was
worth a total of £1.38 billion in England alone.
The UK economy has enjoyed ten consecutive years of growth, with
significant rises in land and property values. UK office rents are
currently amongst the highest in the world and there is
significant pressure on land for new housing and commercial
developments. In these circumstances it does not make sense for
other taxpayers to subsidise owners to keep properties empty.
That is why the Government announced reforms to empty property
relief in the 2007 Budget, in response to recommendations made by
Kate Barker in her independent Review of Land Use Planning and by
Sir Michael Lyons in his independent Inquiry into Local Government.
Key aspects of the reforms announced in the Budget are being
taken forward through primary legislation. A summary of the
provisions in the Rating (Empty Properties) Bill is provided below.
This consultation paper seeks views on proposals for detailed
reforms to be achieved through secondary legislation, in particular:
* possible changes to exemptions from empty property rates
new measures to tackle avoidance of empty property rates
The Rating (Empty Properties) Bill
The Rating (Empty
Properties) Bill was introduced into the House of Commons on 10
May 2007. Its key provisions, which relate to England and Wales:
* amend Part 3 of the Local Government Finance Act 1988 so as to
increase the empty property rate from 50% to 100% of the basic
occupied business rate. This will provide a strong incentive for
owners to re-let, re-develop or sell empty non domestic buildings,
reducing the need for new development on greenfield sites and
increasing access to existing premises for businesses, so helping
to reduce rents and increase the competitiveness of the UK.
provide a zero rate for empty properties owned by charities, as
announced by the Chancellor, and also for empty properties owned
by community amateur sports clubs. This represents a significant
boost to the support given by the Government to the voluntary and
* provide a new power to reduce the empty
property rate from the new level of 100% of the basic occupied
rate back to a minimum of 50% of the occupied rate. This will
ensure that, in future, the Government has flexibility to respond
to prevailing conditions in the property market.
* provide a
new power to make regulations to tackle rate avoidance tactics by
disregarding changes to the state of property in circumstances to
be defined by regulations.
* provide for a number of minor
consequential and technical amendments to existing primary and
After its successful passage through the House of Commons and the
House of Lords the Bill now awaits Royal Assent.
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