Member Article

NE empty property tax harming economy, ministers told

BUSINESS leaders have renewed their call for the Government to review a tax on empty commercial properties which is estimated to cost the region more than £100m a year.

In addition, empty property rates are being accused of stifling business growth across the North East.

Kevan Carrick, a spokesman for the Royal Institute of Chartered Surveyors North East, is calling for the Government to reassess how it applies the rates.

He said a survey of RICS members shows most believe the rates are hindering regeneration and growth.

An earlier report for One North East, co-authored by Mr Carrick, estimated that empty property rates, which are collected by local authorities but paid to the Government, would take £35m out of the region by 2009/10. However, with more units lying empty and new premises not yet occupied, this could now be as high as £100m, he said.

Because of empty property rate liability, many landlords are reluctant to develop vacant buildings and new or expanding businesses are struggling to find suitable premises. In addition, some properties are being demolished to avoid paying empty property rates.

A partner at JK Property Consultants LLP, Mr Carrick has called for a number of changes, such as changing the exemptions for empty property rates and allowing the relief allocation to be devolved to Local Enterprise Partnerships and local authorities.

He added: “One size doesn’t fit all and if the Government really means it when they say that regions will help drive growth they have to do something to help the regions.”

Empty shops and offices have three months relief before they have to pay full business rates, while factories have six months. The rates were originally applied to prevent landlords keeping properties empty until they attracted higher rents. However, Paul Easton, the head of business rates at Storeys Edwards Symmons property consultants said instead they were stifling speculative growth.

He said: “Companies who are growing and who are maybe wanting to move into new or larger properties may still have the old property and have the empty rate liability on that property which could be significant.”

North East Chamber of Commerce policy advisor, Amy Michie, said: “It is difficult to sum up the true economic impact of empty property rates on the region, but what we can say is that they do provide a significant barrier to growth and regeneration.

“It is now more cost effective to demolish an empty property than pay tax on it, which does little to boost regeneration efforts.

“Firms will have to pay tax on properties earning them nothing, while the forced demolition of perfectly useable buildings will mean less affordable space available for new businesses as we emerge from recession.”

This was posted in Bdaily's Members' News section by Kevan Carrick .