The chancellor is to cut the generous business rate relief for empty commercial property.

Industrial property owners now receive 100% business rate relief on unoccupied buildings. Owners of other commercial property, retail and offices, receive 100% relief for the first three months and 50% thereafter.

From April 2008 industrial property owners’ 100% relief will be restricted to the first six months that a building becomes vacant. Other empty properties will have only three months’ relief and then incur the full amount.

The chancellor expects to raise an additional £950m in 2008/09 from the cuts and £900m in 2009/10.

Senior real estate partner at Deloitte Phil Nicklin said: ‘The government would like this measure to encourage empty properties back into the letting market. Ironically, it could encourage owners to partially demolish them to take them off the rating list altogether. This could create a huge blight on the landscape.’