This website uses cookies primarily for visitor analytics. Certain pages will ask you to fill in contact details to receive additional information. On these pages you have the option of having the site log your details for future visits. Indicating you want the site to remember your details will place a cookie on your device. To view our full cookie policy, please click here. You can also view it at any time by going to our Contact Us page.

Call to reform Empty Property Relief

22 April 2009

Empty property rates could cause long term instability to commercial property markets says RICS and LSH Empty Property Rates (EPR) Survey Report

RICS and commercial property consultancy, Lambert Smith Hampton, have published the findings of a survey on the impact of changes to the system of Empty Property Rate Relief. The Empty Property Rates Survey, is the first industry review of the tax following its controversial introduction a year ago.

Although the debate around empty property rates has been vocal and well publicised in recent months, it has largely been based on anecdotal evidence. What this research aims to do is establish the actual impact of the changes and provide evidence to allow for a reassessment of the policy.

Prior to April 2008 the void period where empty rates did not have to be paid was three months for most commercial property and 50 percent of the rate thereafter; empty industrial property was exempt from liability indefinitely. Changes came into effect in April 2008 and consequently only industrial properties were entitled to void periods of six months with no void period for other commercial property. Once the void periods had elapsed, the empty rate had to be paid at to the level of 100 percent of the standard business rate.

According to the RICS/LSH, “Empty Property Rates (EPR) are paving the way for future instability in non-residential property markets as property owners are increasingly turning to demolition to avoid paying the rates whilst cutting back on future investment. Empty Property Rates are exacerbating the financial difficulties of many property companies and occupiers with an overwhelming 93 percent of respondents in agreement that this was the case.

“This has led to an increase in the demolition of perfectly sound properties, with 75 percent of respondents agreeing that there had been an increase in the demolition of properties and 85 percent believing this was to avoid paying the rates. In addition all sectors saw a decrease in investment of new properties, with the industrial sector being the hardest hit, and 79 percent believed that Empty Rates are having a detrimental effect on town regeneration and speculative development.

“Consequently there is likely to be shortage of available commercial property once the economy turns around. EPR will also have a significant negative impact on the ability of central and local government agencies to pursue property-led urban regeneration.

The problem of demolition is set to get worse over the coming months, as the results indicate that owners are tending to wait around 12 months before considering demolition of empty stock, meaning we should expect to see a sharper rise in occupiers resorting to knocking down empty buildings over the coming months. “

According to Gillian Charlesworth, Director of External Affairs at RICS, “Although the Government’s motives for reducing EPR relief were well intentioned when initially introduced, it is clear that the recession has led to these rates having the opposite effect and causing more damage to a sector that is already suffering. This survey has finally produced the evidence-based facts to support the need for changes to be made to this hugely unpopular tax.

“On the basis of these findings, we have urged the Government to give serious consideration to increasing the EPR relief to 12 or even 18 months before full business rates across all non domestic properties become payable, or to remove, or significantly reduce, empty property rates across all non domestic property, in full consultation with the industry.”

Contact Details and Archive...

Print this page | E-mail this page


View more articles

Measuring FM Performance

Counting costs rather than measuring performance and demonstrating value to business is one of the reasons why FM has failed to achieve a strategic role in...
Article image

Why the Law Says You Need a Nappy Bin Disposal Service

At home, parents are used to disposing of their babies’ used nappies the same way they do any other domestic waste - bagging it up and sticking it in the r...
Article image

Balancing the needs of FM clients and service providers

Philip Ratcliffe says that providing a fair service to both sides involved in the tendering process is a finely balanced art....

Benchmarking maintenance

BSRIA has just published this year's operation and maintenance benchmarking report as a guide for building operators to evaluate their performance against ...
Article image

How a new farm park achieved the right washrooms for its visitors

When Lower Drayton Farm in Staffordshire was planning its farm park attraction, Play@ Lower Drayton Farm, getting the washrooms right was an important proj...
Article image

Lloyd’s transforms office space to make it fit for the future

Following the case study published on the Lloyd’s building in central London published in the