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De-roofing set for revival

The Government is changing the empty property relief from business rates by applying the full business rate to properties that have been empty for three months or more – and removing the exemption from industrial and warehouse property so that the full rate will be applied if they have been empty for six months or more. These reforms will take effect from 1 April 2008.

In an interview on the radio this morning, Liz Peace, spokesman for the British Propery Federation, suggested that it could lead to a resurgence of what is known as "Constructive Vandalism" such as de-roofing, in order to avoid the tax. It could also encourage developers to defer completion of new buildings. Peace claimed that the rules were unfair as the average time for a re-let was 24 months.

If I heard this correctly, it is incredible, as it shows that whilst owners obviously want to keep their premises let, they are willing to wait a considerable time to squeeze the highest possible rents from their properties. Such a volume of property being held empty must itself be a contributory factor in causing local shortages and maintaining rents at excessively high levels.

The government is on to something in trying to raise the cost of holding property empty, but it is going about it the wrong way. If all buildings were exempted from tax and the charge levied on sites alone, regardless of what was on them or how they were used, nobody could avoid it by "constructive vandalism".

Unfortunately, Liz Peace's prediction is likely to come true.
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