Government warns of tough line on avoidance as it ignores last-ditch attempts at reprieve

The government has slapped down the property industry’s last-ditch attempts to prevent the £1bn-a-year empty rates tax grab that comes into effect next week.

Local government minister John Healey told Property Week: ‘The reforms are good for businesses, the environment and most of all, good for our communities.

‘These changes will help bring empty buildings back into use, reduce rents for small independent shops and create thriving high streets and town centres.’

A spokesman added: ‘We have no plans to change the legislation passed by parliament to bring these changes into force on 1 April.’

The response followed Healey’s warning on Tuesday that attempts to avoid paying the rates bills through deliberate vandalism would be met with ‘zero tolerance’.

He said: ‘Commercial property demand remains high and there can be no excuse for deliberate dereliction. I will be monitoring the situation closely.’

However, the property industry, which is finally realising the impact of this legislation, said it was ‘one of the most significant threats to the property industry in recent years’.

The BPF teamed up with the RICS, the Confederation of British Industry, the Business Centre Association and the Rating Surveyors’ Association to write to the chancellor at the start of the week demanding that he reconsider.

Chief executive of the BPF Liz Peace, who also appeared on Radio 4’s Today programme, said: ‘Is it fair that developers should be penalised for taking risks that essentially help ministers deliver their policies on creating economic growth and sustainable communities?

‘Of course not. Our members feel very strongly about this issue and rightly so, and the BPF will be gathering more evidence on the likely effects of the rates cut in the coming months.’

Also this week, data released by Lambert Smith Hampton suggested that more than half of the industry will review its property portfolio and slow development programmes, sell off properties or demolish buildings that are unattractive to tenants.

The firm’s survey of 100 of clients occupiers, developers and investors also found that 90% believe that the change will have a detrimental effect on regeneration, 80% believe it will result in fewer properties coming to market and 70% expect capital values to drop. 53% expect rents to fall as well.

Lambert Smith Hampton rating director Richard Wackett said: ‘Darling and his empty property rates reform represent bad news for a commercial property market already suffering from the nine-month long credit squeeze.’

Empty rates are due to come into force on Tuesday. Industrial property owners will pay 100% rates if a property has been empty for six months. Other commercial owners will pay full rates after three months’ vacancy.