A new study has revealed that introducing full business rates on empty commercial properties will not achieve government's objectives.

The government claimed that the imposition of empty rates would encourage landlords to reduce rent levels on their empty commercial properties and bring them back into use.

However, an analysis undertaken for the British Property Federation (BPF) clearly demonstrates that the empty rate tax has little, if any, bearing on the rents charged by landlords. These are driven mainly by the local demand for property.

Current rent levels are plummeting, not because of empty rates, but because of the extreme drop in demand for property, which is also resulting in soaring vacancy rates. Loss of rental income combined with empty property rates now threatens to push businesses over the edge.

-- Advertisement --

In addition, empty property rates have resulted in a slowdown in regeneration schemes and the premature demolition of existing older buildings, from which partial rents can no longer cover the increased rates bills on the empty units.

The research supports the industry's widespread belief that the government introduced empty rates simply as a means to collect revenue. Its claim that the move would lower rents and bring empty properties back into use was merely a post-rationalised excuse to justify the measure.

Speaking following the meeting, Liz Peace said: "The research shows that the government's justifications for the introduction of the rates were entirely wrong. Empty property rates simply won't drive down rents in the way government claimed, and they are adding costs to both owners and occupiers at a time when they are least able to bear them.

"Their introduction clearly shows that government either doesn't understand, or chose to disregard, the fundamentals of the commercial property business."

(CD/JM)