UK Regeneration Chief Attacks Government Over Property Tax

by Jason Gorringe, Tax-News.com, London

27 August 2008

One of the UK government's most senior advisers on regeneration has gone on record to warn of the "chaotic" effects that taxing empty properties is having on regenerating the most deprived areas of Britain.

John Nicholls, chairman of the government-funded urban regeneration companies (URCs) chief executives group, told the BBC’s Today Programme on Tuesday that owners are demolishing empty buildings to avoid paying the tax introduced in the most recent budget, leaving parts of the country "resembling bomb sites".

According to Nicholls, as a result of this policy, regeneration projects had been rendered unworkable, threatening jobs and new homes, because some developers are simply leaving sites unfinished rather than risk liability for the tax.

The British Property Federation (BPF), has been leading a campaign against the tax, and is calling for those affected to use its 'hotline' (info@emptyrates.com) so it can gather evidence of the effects.

Before the changes, vacant offices and shops received rate relief of 50% and industrial units gained full relief. Now all unused commercial property has to pay full business rates after a three-month period of grace for commercial premises and six months for industrial property and warehouses, adding about GBP1.3bn a year to government coffers.

The BPF says that URCs warned privately of the potential adverse consequences of the reforms in May last year, but have now decided to take the campaign to ditch the tax public.

When asked what he hoped to achieve, Nicholls responded:

“First of all, to draw attention to the fact that this isn’t just a problem for the development and property industries, important though they are, it’s really impacting on the business of urban regeneration and also to point out that it’s not all about demolitions.

“This is starting to affect the supply of much needed new property and job-generating property in our urban areas.”

Nicholls added that while the government has responded to these concerns with "a polite acknowledgement in fairly generalised terms," the Treasury is unlikely to be in a hurry to change the rules, given the amount of revenues that the tax is generating.

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