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Shop vacancies treble as Brown's empty property tax bites

publication date: Aug 3, 2009
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The number of empty shops across England and Wales has risen from 4.5% to 12% in a year according to a report by the Local Data Company that covers every area of the country.

The report, backed by the British Property Federation (BPF), shows Margate to be one of the worst hit areas with vacancies increasing from 5% to 25% while Derby is up from 8% to 22%. Despite these shocking statistics, the government has continued to tax empty properties by making the leaseholders pay full business rates.
The BPF wants the complete scrapping of empty property rates (EPR) as well as re-think on changing the planning use of buildings to enable empty shops to be more efficiently used for non-retail pursuits.

The EPR tax is paid by whoever owns the lease, meaning that occupiers are also affected if they have a longterm lease. The BPF has said it’s the equivalent of making the unemployed pay income tax, calling again for full scrapping of the tax.

The Local Data Company survey is unequivocal evidence of how badly the property and retail sectors have been hit and demonstrates clearly how the situation has worsened since the government brought in EPR in April 2008. The report was carried out across over 700 town centres and is the most in-depth of its kind.

Liz Peace, BPF chief executive, said today:
“Smaller centres have to reinvent themselves in terms of convenience and we need a rethink on change of use, accessibility and car parking. We need to properly work out what smaller towns are for, as they’ve just accumulated problems over the years. Second rate retailers have been found out by the recession, and as they often collect in these places that’s one reason why many smaller places have high vacancy rates.”

Ms Peace went on to say that more shop units will disappear as a result of the tax greed:
“Ministers must take note of how bad the property sector has been hit by the recession, and also look specifically at how much worse things have got since they began charging empty rates last year. This is unequivocal evidence of the failure of this policy to bring vacant properties back into use, as property owners and any occupiers who hold a lease, try in vain to find new tenants.“

“Charging full business rates on empty shops is also killing of businesses. Over 15 million sq ft of space has been demolished by firms wishing to avoid paying the tax. If empty rates were reduced and collected by local authorities rather than central government, the money could go back into the public realm and benefit the areas with high vacancy rates. But this doesn’t happen. It’s simply a money generator that is the equivalent of making the unemployed pay income tax.”