Local Government Minister Phil Woolas announced the scheme as part of a package he said will create thriving urban centres, renovate empty buildings and promote greater use of brownfield land.
Among the measures is a plan to scrap tax-relief on empty commercial properties.
Government modernisers argue that providing tax relief for buildings that sit empty can no longer be justified when UK office rents are among the highest in the world. Businesses in Manchester and Birmingham pay more to rent their offices than counterparts in New York, Hong Kong and Milan.
So from April 2008 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.
Tax relief on brownfield sites will be extended and a new allowance to support the renovation of empty business premises in our most deprived communities introduced. The government are confident that they will ultimately “better incentivise the re-use, redevelopment or sale of empty commercial property”.
The Business Premises Renovation Allowance (BPRA), which was introduced with April’s budget, provides a 100% allowance for owners renovating factories, offices and shops that have stood empty for more than one year in the ‘Assisted Areas’ (the most deprived wards in the country as recognised by the EU).
Phil Woolas MP 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% 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.”
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.
Many British towns including York, Birmingham and Slough face real problems, with up to a fifth of all commercial properties empty.
