MERSEYSIDE’S commercial property sector has condemned the Government’s “astonishing” decision to scrap rates relief for empty properties with a rateable value under £18,000.
Following the introduction of 100% empty rate charges in April, 2008, the Labour Government gave relief in 2009 to empty properties with a rateable value (RV) of below £15,000.
This relief was carried forward into 2010/11, following the rating revaluation, but only where the new assessment was less than £18,000.
Now even that is to go, as the cash- strapped coalition Government seeks to raise an estimated £400m a year in extra taxes from the commercial property sector.
The threshold for exemption will drop to a rateable value of £2,600 from April 1, 2011.
The protests are being led by the British Property Federation. Chief executive Liz Peace said: “If the Government is pinning its hopes on a private sector-led economic recovery, then this is a damaging and retrograde step. Empty rates is a tax on hardship at the worst possible time.
“The majority of the properties affected by this announcement will be in areas that are already economically disadvantaged, and so this will be a further blow.”
That view was backed by commercial property agents in Merseyside who claim the move is short-sighted and will result in a fall in investment and development in the sector.
Andrew Owen, of Liverpool-based Mason Owen, told LDP Business: “The long-term impact far outweighs any short-term gain that is achieved by this tax and it is extraordinary, given the weight of public opinion and quite frankly common sense, that the Government has sought to further penalise landlords of under-performing buildings by reducing the threshold for exemption even further.
“At a time when landlords are experiencing high vacancy levels which are only likely to increase due to the planned public sector cuts, it is astonishing that the Government has persisted with this tax which will only serve to curtail future investment and growth and send many into bankruptcy.”
Martin Howard, a partner at Knight Frank, in Liverpool, raised the spectre of owners having to consider demolishing their own properties.
“While we are all aware of the economic turmoil currently being experienced in the UK at the present time, the latest Government announcement to remove the relief on vacant commercial premises is seen as a retrograde step within the industry and will do little to stimulate development of commercial premises,” he said.
“Already hit with reduced rental levels within the commercial property sector, we are likely to see another round of demolition of this country’s building asset base as hard-pressed owners seek to remove the heavy burden of business rates.”
Jason Wadeson, from Wirral-based Smith & Sons, warns of a possible impact on the already hard-pressed retail sector.
He said: “The temporary empty rate threshold currently set at £18,000 will cease to exist on the March 31, 2011, therefore, from April 1, 2011, the RV threshold will revert back to £2,600.
“This could have a significant impact on clients who have properties with RVs up to £18,000.
“In all likelihood, landlords will be more willing to look favourably upon soft deals involving properties with RV’s £2,600 to £18,000 – with a view to mitigate their own position.
“Main areas of concern are likely to be secondary shopping centres, many of which in the North West are already struggling.
“This change is also likely to have an adverse affect on the disposal value of property. Some sources are suggesting the £18,000 RV threshold has been scrapped – in truth, it has always had a limited shelf life, but has not been renewed as had been hoped.”
