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Pressure over the tax on empty property will grow again as the British Property Federation (BPF) launches emptyrates.com to track the chaos of demolitions and scrapped regeneration schemes, while more importantly giving the public a voice directly to local MPs.
The BPF, trade body for property, wants the relief put back to how it was a year ago when Gordon Brown scrapped it. The website, backed by the likes of ASDA, Tesco, EDF and AXA and the CBI - will catalogue the effects of the tax and allow people to tell their own stories.
The government removed the relief from business rates for empty commercial space last April and has pressed on despite the recession and the fact that 15 per cent of retailers are likely to go bust this year, leaving swathes of empty shops.
Before 1 April last year, empty offices and shops were liable for half their rates bills while industrial units paid nothing. Since then they've been taxed the full amount, despite the lack of income.
In spite of worsening conditions, business secretary Lord Mandelson claimed that empty rates were 'good for business. The government responded to BPF pressure with a concession in last November's pre-Budget report offering a one-year holiday for tiny properties - those with a rateable value below £15,000.
Chancellor Alistair Darling claimed to be helping 70 per cent of property owners with the exemption, but the truth was that it was just spin. This figure was greatly exaggerated by including ATMs, public toilets and car park spaces. The government later admitted that it this change would only hand back 20 per cent of what they would have collected.
The BPF has insisted that property owners are not asking for bailouts, simply stating that those with property they cannot fill because of the recession should not be doubly punished.
The multiple effects of empty rates include (pictures available):
Housing schemes scrapped - regeneration projects on hold due to added costs
Because complex and costly regeneration projects often require firms to buy up properties and hold on to them while they acquire other nearby sites, empty rates means that there's an extra tax burden on these schemes at the worst possible time. The risk of newly developed property remaining empty for longer (because of the recession) and at higher cost (because of empty rates) makes many regeneration projects even less attractive.
With margins squeezed and property prices falling, empty rates are causing regeneration projects and vital new investment in communities to be killed off. Big players in regeneration, such as ASDA, are finding empty rates a significant barrier to further investment in the current downturn. Homes, schools and health centres are not being built because of the government's short sighted approach.
Demolitions - estimated 15 million sq ft of property flattened
Empty rates have led to the demolition of an estimated 15 million sq ft of property, razed to save businesses large and small from an additional cost that they cannot bear in the current market. Even the biggest brands - like ASDA and Legal & General - have admitted flattening buildings, while individual post office owners forced to close by Gordon Brown have also been hit with empty rates bills.
Pensioners hit - thousands now face ruin as investments turn to liabilities
Pensioners who encouraged by the government to invest in property to provide for their retirement have seen their investments turn to liabilities. Meanwhile, those with investments in pension funds - such as PruPIM or Axa - will also reap lower returns because of the tax. Funds have begun to pull cash out of property assets despite the solid income returns that tenanted property can deliver because of this.
Job losses - surplus space tax is leading to job culls instead
Employers who may have been able to save jobs by reducing property costs have been forced to lay people off, since empty rates has meant that cutting back on space would actually cost them money.
With employment rocketing past 2 million, it is yet another damaging consequence of empty rates ignored by a government that is supposedly 'committed' to helping business.
The website features comments from politicians and businessmen and allows evidence to be submitted to local MPs and the BPF. It also acts as a resource for anyone wishing to see just how bad the situation is.
Backing for the BPF's campaign has come from all sides. ASDA, Nokia, Legal & General and Tesco are just some of hundreds of firms to back it. Over 120 MPs have backed Commons motions, while Gordon Brown's good friend and chief whip Nick Brown even spoke out against the tax, causing a Cabinet rift with Lord Mandelson last November.
Boris Johnson, Mayor of London, and Ian Luder, Lord Mayor of London have both expressed their opposition to the tax.
Liz Peace, chief executive of the BPF, said:
"While property is a fundamental driver in our economy, we're not asking for any bailouts, we just want fairness and taxing empty space is simply not fair. Any tax take which increases as income goes down is fundamentally wrong. Empty rates isn't just hitting big firms, it's hitting individuals, killing off people's investments and reducing the economy's capacity to recover. With every passing day Gordon Brown and Lord Mandelson are digging a bigger hole for us to climb out of."
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