Budget 2009: Industry dismayed as no empty rates relief

The chancellor in his budget for 2009 made a number of concessions to the property industry but said that the removal of empty rate relief would remain, and that the changes announced in the pre-budget report – a one year holiday for properties with a rateable value of less than £15,000 – would be implemented.

Liz Peace, BPF chief executive, said prime minister Gordon Brown has ignored ‘the industry, the public, his own chief whip and regeneration advisers and basic economic sense’.

She said: ‘In trying to trim the fingernails of commercial rents in a boom period, Gordon Brown has cut off the hands of the UK’s property sector which contributes over 5 per cent to GDP. We urge the government to use the powers left into empty rates legislation that allow for relief to be immediately reapplied.

‘On the day where the worst recession for generations has been confirmed with new figures highlighting the full trauma of unemployment, the government has decided to plough on with a tax on hardship forcing thousands out of business, causing millions of square feet of buildings demolished and causing even more jobs to be lost. While many have taken drastic steps to demolish their buildings, occupiers with a lease don’t have that option and will be forced to cut jobs as a result. It is absolutely bonkers to be hitting those firms trying to cut costs with more taxation.

‘A measure brought in to cut rents totally forgot that commercial property is largely owned by the pension funds we invest our futures in. With around 15 per cent of shops set to become empty this year, many of those hit with empty rates have absolutely nowhere to turn. This tax will wreak further damage on our economy.’

Jerry Schurder, head of rating at Gerald Eve, said: ‘All spin and no substance. The Chancellor passed up the opportunity to make a real difference to businesses by making meaningful changes to the business rates system, in place of the previously announced “soundbite savings”.’

Simon Tivey, senior manager at PricewaterhouseCoopers, said: ‘In the current downturn empty property tax rules discourage investment in new construction projects, which in turn has a wider impact on the property market as a whole.’

David Parker, director and head of rating at Savills, said; ‘The Chancellor's failure to address the inappropriate burden of charging full rates on vacant and unlettable properties in the current climate is a huge mistake. Opposition to this tax is widespread and has been since the idea was originally conceived at a time when the economy was in a vastly different shape to what it is now. The loss of buildings to demolition will now become even more widespread as the only safe way to avoid the charge, but we will also no doubt see the loss of many more businesses who are stuck with leases on properties which they don't presently require, but which could otherwise be needed when the economy picks up.’