The property industry was this week celebrating a long-campaigned-for concession on empty rates that could save it £150m in taxes.
On Wednesday, chancellor George Osborne announced plans to exempt new development from the so-called Bombsite Britain tax for 18 months from October 2013.
The announcement, made in the Autumn Statement, follows a pressure campaign by Estates Gazette, the British Property Federation, Business Centre Association and RICS, alongside a rates review by York Outer MP Julian Sturdy and Wolverhampton South West MP Paul Uppal.
The review was commissioned in May by Osborne after an EG investigation revealed that the tax cost government up to £70m pa.
Osborne said: “The previous government abolished empty property relief, and, as excellent work done by my honourable friends the members for York Outer and for Wolverhampton South West and others shows, that has blighted development in our towns and cities.
“The proposal from my colleagues that we create a long grace period before newly completed buildings have to pay empty property rates is sensible, and we will introduce it next October.”
Sturdy said: “The move to give new-build commercial properties an exemption from empty property rates will be a welcome boost to the economy.”
Figures from EGi show that more than 5m sq ft of new office development is due to complete between October 2013 and September 2016 in central London alone, which CVS rating chairman Don Baker said would produce savings of £6m pa.
SEGRO chief executive David Sleath said: “This is encouraging news and it’s thanks to effective lobbying and campaigns like the one run by EG that has helped to achieve this result.”
He added that developers would need more confidence in the economy and access to finance before starting major speculative development, however.
Savills’ head of rating, David Parker, said Osborne had “diverted attention from the wider issue of empty rates concerning existing empty buildings” with the announcement.
Sturdy’s review had also recommended an increase in the rate relief threshold from £2,600 to £18,000; full exemption for industrial property; and six months’ grace for offices and shops.
Both Sturdy and Uppal vowed to continue to push for more rate reliefs and “keep the matter under review”.
The exemption will be subject to consultation in spring 2013 and will be capped at the European state aid maximum of €200,000 (£160,000) per company on a three-year rolling average.
However, by using special-purpose vehicles, developers can qualify for relief on multiple occasions.
nick.whitten@estatesgazette.com
