May 11 2007
Local Government Minister Phil Woolas has today (11 May) published new legislation aimed at encouraging empty shops, offices, factory and warehouse buildings back into commercial use as part of a package to create thriving urban centres, renovate empty buildings and promote greater use of brownfield land.
The new measures modernise business rate relief for empty properties and, together with a newly introduced allowance to support the renovation of empty business premises in our most deprived communities and proposals to extend tax relief’s on brownfield sites, will better incentivise the re-use, redevelopment or sale of empty commercial property.
Businesses that rent premises will particularly benefit from the changes, which will increase the availability of premises, thereby reducing rents and increasing the UK’s competitiveness.
At present, most empty commercial property receives a 100 per cent relief from taxation for the first three months, and 50 per cent thereafter; and empty warehouses and factories receive a permanent exemption from rates.
However, the current system of providing tax relief for buildings that sit empty can no longer be justified when UK office rents are among highest in the world. From next April 2008, the relief will be modernised. Empty commercial property will be liable for the full business rate after an initial rate-free period of three months, or six months for factories and warehouses.
Charities and community amateur sports clubs will be granted a complete exemption from rates on their empty properties - a significant boost in Government support for the charity sector.
Phil Woolas said:
“The reforms will encourage owners of empty properties to bring them back into use, helping to create thriving and vibrant town centres. No-one wants to live or work next to an empty property, and it is frankly daft for the state to subsidise it when commercial rents are so high.
“That is why a package of reforms that will drive down those rents, encourage business growth, and promote brownfield development is needed. As well as reforming empty property rates, from last month a new 100 per cent capital allowance is available for the cost of renovating or converting unused businesses in deprived areas. Together these measures will incentivise and support action to bring empty shops, offices and warehouses back into use.
“Our reforms will also boost Government support for charities and community clubs by exempting all empty properties which they own from rates.
“Reforming the business tax system will help to ensure that the UK remains an excellent place to do business and to invest. Reducing the rate of corporation tax whilst committing to retain the RPI cap on the yield from business rates - which have remained constant in real terms since 1990 - means that the demand for good quality business property and a vibrant urban environment will remain high. This wide-ranging package supports owners, occupiers and investors - but most importantly it supports communities, and it’s good for the environment.”
Reform of empty property relief was a key recommendation of Sir Michael Lyons’ report into Local Government Finance and has also been recommended by Kate Barker’s review of Land Use Planning.
The new measure will help to boost local economies and increase the supply of brownfield sites, helping to preserve greenfield land, and are in line with recent moves by Ruth Kelly to create thriving town centres by ruling out planning proposals which allow more out-of-town development.