The Government has responded strongly to increasing pressure from business groups over empty rates reforms, which come into force today and are set to net £1bn a year for the Treasury.

Implementing the reforms, local government minister John Healey said: ‘We have worked with industry and their concerns are well known, but it is simply not in anyone's interest to subsidise buildings to sit empty when UK office rents are among the highest in the world. Manchester for example has higher office occupation costs than Manhattan and Milan.’

Healey’s comments follow a letter to his department from a number of business organisations including the British Property Federation, which was sent this week.

Bitterly opposed

As well as the BPF, CoreNet, the Royal Institution of Chartered Surveyors, the Confederation of British Industry and the Business Centre Association, the British Retail Consortium has added its name to the list of organisations bitterly opposed to the tax.

Stephen Robertson, BRC director general, said: ‘The government must take us for April Fools. It is ignoring the mechanics of the property market because of a desperate need to plug holes in the budget at a time when the economic slowdown makes it more likely business premises will fall vacant.’

In the letter, the organisations demanded that the Government make last-minute changes to the legislation or face falling investment values and a lack of development.

£3bn grab

The organisations want the level of tax on empty property to be 50% and the period of relief increased from six months to eighteen months.

At the moment, today’s changes will see full rates charged on empty properties after either three or six month exemption periods have been exhausted, with the government raking in an extra £3bn from businesses over the next three years. Properties that have already been vacant for the three or six months at 1 April 2008 will immediately attract the full rate, as the tax is retrospective.