COMMUNITIES AND LOCAL
GOVERNMENT News Release (073) issued by The Government News Network
on 25 March 2008
LOCAL GOVERNMENT
MINISTER JOHN HEALEY has announced a no nonsense approach to
enforcing changes to empty property reliefs coming into force on 1 April.
He today set out tough measures that councils already have to
tackle potential moves by owners to try and avoid liability, and
gave a zero tolerance pledge to intervene with further measures if
evidence suggests deliberate dereliction of properties is taking place.
Changes to the out of date system of reliefs remove perverse
incentives to keep buildings empty, and encourage owners to bring
them back into use, helping to revive high streets and town centres.
Businesses that rent premises will particularly benefit through
an increase in the availability of properties, thereby reducing
rents and increasing the UK's competitiveness. Charities,
community amateur sports clubs and companies in administration
will also be granted a complete exemption from rates on their
empty properties.
In December John Healey ruled out immediate anti-avoidance
legislation to prevent commercial property owners from removing
roofs or deliberately rendering their properties derelict, as
evidence shows the risk of this happening is low, but he gave a
strong commitment that the option remained on the table.
Delivering a warning to those considering deliberate dereliction
today he said that work is already underway with the Local
Government Association, the Valuation Office Agency and the
Institute of Revenues Rating and Valuation to monitor the impact
of the reforms and assess whether new regulations should be
introduced in future. He made it crystal clear that he will keep
the situation under close review and will not hesitate to act on
further anti-avoidance measures if necessary. Writing to every
billing authority in the country he also spelled out wide ranging
and tough powers they already have in place to prevent deliberate
dereliction including to:
* Make owners take action to clean up any high street, town
centre or rural site, derelict or semi-complete building if they
are 'adversely affecting the amenity of the local area'.
If the owner does not comply councils can take action themselves
and recover the costs. Councils are encouraged to use this power
proactively, and research has shown quick and overwhelming
compliance. (Section 215 of the Town and County Planning Act 1990);
* Order the completion of a development if it is causing an
adverse affect on its surrounding and the planning permission
period has expired. (Section 94 of the Town and County Planning
Act 1990), or
* If the work can be reasonable expected to be completed within
three months the building shall be deemed to be completed on the
day specified in a notice from which date rates will be payable in
respect of the building. (Section 46A of, and Schedule 4A to, the
Section 46A of the Local Government Finance Act 1988)
John Healey said:
"These reforms are good for businesses, the environment and
most of all, good for our communities. No-one wants to live or
work in a ghost town of empty offices and closed-down shops. These
changes will help bring empty buildings back into use, reduce
rents for small independent shops and create thriving high streets
and town centres.
"Commercial property demand remains high and there can be no
excuse for deliberate dereliction.
"It would be an extreme step for a property owner to go to
the lengths of deliberately vandalising their asset. I do not
believe this is likely, and I expect the property industry to
adapt in a responsible manner.
"But I will not tolerate any deliberate dereliction and will
act on new anti- avoidance measures if necessary. That is why I
will be monitoring the situation closely and why I am reminding
councils of their powers to safeguard local areas from potential
commercial vandalism."
The reform of empty property relief is part of a wider package
designed to increase UK competitiveness and promote more efficient
land and property markets. Measures such as the new 100% capital
allowance for renovating or converting empty business property in
Assisted Areas will encourage owners to bring empty properties
back into productive use and discourage deliberate dereliction.
The changes to Empty Property Reliefs
At present, most empty commercial property receives a 100 per
cent relief from taxation for the first three months, and 50 per
cent thereafter; and empty warehouses and factories receive a
permanent exemption from rates.
However, the current system of providing tax relief for buildings
that sit empty can no longer be justified when UK office rents are
among highest in the world. From 1 April empty commercial property
will be liable for the full business rate after an initial
rate-free period of three months, or six months for factories and warehouses.
Charities, community amateur sports clubs and companies in
administration will be granted a complete exemption from rates on
their empty properties.
Key Facts
CBRE research report on Global Market Rents (November 2007) found
that 7 out of the top 20 most expensive office occupation costs
were British towns and cities.
At the same time, the amount (by value) of empty property in the
City of London has doubled since 1999 - up to 16 per cent in 2004-05.
Other English towns and cities, like Manchester, Birmingham and
Slough faced similar problems in 2004/05 with up to nearly a fifth
of all commercial properties empty.
The proportion of commercial properties lying empty in 2004/05 in
London (11%) is higher than the national average (9%), and Hackney
has the highest proportion empty in the country (28%).
A list of the proportion of empty commercial property by local
authority is available at: Commercial and Industrial Property
Estimated Vacancy Statistics: England, 2004/05
Notes to Editors:
1. Anti Avoidance regulations Following consultation responses to
the 2007 consultation "Modernising Empty Property
Relief" last year the Government accepted that there was no
substantive evidence to suggest that the risk of avoidance
activity would be anything more than low. Accordingly the
Government decided it would be sensible to defer making
anti-avoidance regulations.
2. However, the Government will be actively monitoring the impact
of the reforms, working closely with the Local Government
Association, the Institute of Revenues Rating and Valuation, and
the Valuation Office Agency. If, through monitoring the impact of
the reforms, evidence indicates that avoidance activity is taking
place, the Government will use its new powers in section 66A of
the LGFA (inserted by the Rating (Empty Properties) Act 2007) to
make anti-avoidance regulations.
Existing Powers available to Local Authorities
3. Although the Government accepts the risk of avoidance activity
is low, Local Authorities already have existing powers available
to them to tackle some of the most obvious avoidance behaviour -
for instance demolition and non-completion.
Section 215 of the Town and Country Planning Act 1990 (TCPA)
4. Section 215 of the TCPA can be an effective tool in requiring
land and buildings to be cleaned up when their condition adversely
affects the amenity of the area. Section 215 of the TCPA can be
used on large vacant industrial sites, town centre street
frontages, rural sites, derelict buildings, and semi-complete
development and the scope of works that can be required includes
planting, clearance, tidying enclosure, demolitions, rebuilding,
external repairs and replanting.
5. If it appears that the amenity of part of an area is being
adversely affected by the condition of neighbouring land and
buildings, a Local Authority may serve a notice on the owner
requiring that the situation be remedied.
6. Guidance on the use of Section 215 of the TCPA 1990 can be
found at http://www.communities.gov.uk/documents/planningandbuilding/pdf/319798
Section 94 of the TCPA 1990
7. Section 94 of the TCPA provides a power to Local Authorities
to order the completion of development within a specific time
limit, if the Local Authority considers that a development will
not be finished within a reasonable period or is causing an
adverse effect on its surroundings.
8. A completion notice does not take effect until after
confirmation by the Secretary of State and cannot be served until
after the time period within the planning permission allowed for
commencement of development.
9. Further information on s.94 completion notices is available at
http://www.communities.gov.uk/archived/publications/planningandbuilding/completionnotices
Section 46A of the LGFA
10. Section 46A of, and Schedule 4A to, the LGFA requires local
authorities to serve a completion notice on the owner of a new
building if it comes to the authority's attention that the
work to complete the building can be reasonably expected to be
completed within 3 months, unless the valuation officer directs
otherwise. The building shall be deemed to be completed on the day
specified in the notice or the day determined under Schedule 4A
(dependent on whether an appeal is brought against the notice),
from which date rates will be payable in respect of the building.
Other reliefs for deprived areas
Business Premises Renovation Allowance (BPRA)
Last year's Budget included a new tax allowance from April
2007 for the renovation of empty commercial property in our most
deprived communities. The Business Premises Renovation Allowance
(BPRA) provides a 100 per cent allowance for owners renovating
factories, offices and shops that have stood empty for more than
one year in the Assisted Areas (the most deprived wards in the
country as recognised by the EU).
Land Remediation Relief (LRR)
LRR (introduced 2001) enables owners of contaminated land to
claim a corporation tax relief of 150% of the costs of
decontamination. LRR was claimed on around £190m of expenditure on
land remediation in 2005-06. The cost of support was almost £30m
in 2005-06.
Budget 2008 announced that land remediation relief is to be
extended to derelict land and the removal of Japanese knotweed by
treatment from 1 April 2009.
The Government committed to reforming tax relief to encourage the
development of long-term derelict sites, particularly for new
housing, in a more environmentally sustainable manner.
The Budget also included a major consultation on brownfield tax
relief's, including proposals to extend Land Remediation
Relief (LRR) to include not only chemically contaminated
brownfield sites but also sites that have become derelict as a
result of long term abandonment.
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