UK legislation on empty property is bad news for almost everyone EXCEPT the demolition industry.
The UK Government’s Empty Property Rates (EPR) legislation has resigned England and Wales to a continued boom bust commercial property cycle; delivering property shortage and stifling regeneration and investment, an industry survey has revealed.
Published today, the Empty Property Rates Survey, by national commercial property consultancy Lambert Smith Hampton (LSH) and Royal Institution of Chartered Surveyors (RICS), is the first research into the controversial Government policy 12 months after its introduction.
LSH Director of Rating, Richard Wackett, said: “The industry believes that the demolition of property will increase significantly in coming months as the recessional plight of business is exacerbated by growing EPR debts.
“Many property owners are now left with no option but to demolish buildings that are sitting empty – generating large EPR bills, but no income. This will leave the commercial property market with a shortage of stock when demand picks up.
“It is clear that the property sector wants immediate change from the Government, including a substantial increase in the relief available for owners of non domestic buildings, particularly given the current state of the market. Indeed the Pre Budget Report acknowledged the need for support, albeit limited, with the temporary exclusion from rate liability of non domestic properties with Rateable Values below £15,000 for 2009/10”.
The consensus of more than 600 property professionals, who participated in the LSH and RICS survey, is that the Government’s overarching objective to provide an incentive for owners to return vacant buildings to use to the benefit of occupiers – has been highly unsuccessful.
Richard said: “The Government’s EPR policy has failed. 85% of professionals surveyed within the Empty Property Rates Survey Report fear that EPR is negatively impacting on the regeneration of towns and cities. A key concern is that 92% state that EPR policy deters speculative development – exactly the activity that is needed to rejuvenate Brownfield sites.”
The survey presents the following findings:
– 78% of participants believe EPR has exacerbated the present financial difficulty of property firms and occupiers.
– 83% of participants state that EPR has reduced property values
– 88% of participants argue EPR has deterred investment in industrial property specifically (given longer average vacancy rates).
– 85% of participants argue the EPR liability is the single biggest factor for the demolition of buildings at present.
– 43% of buildings being demolished would deliver rental income of £50-250,000 if let.
– 73% of participants have reviewed their property portfolios as a direct consequence of the removal of EPR relief.
