Tax hike on empty property “straight out the Walter Mitty school of economic regeneration policy” say Tories

6 Jun 2012

Policy area: Business rates

Chancellor George Osborne’s empty rates policy has been ridiculed by members of his own party after Scottish Conservatives slammed plans to increase tax on empty properties north of the border.

The Scottish Tories described the move by the Scottish National Party (SNP) as “straight out the Walter Mitty school of economic regeneration policy” that would only “further damage the Scottish economy”. 

The SNP said last week it would press ahead with plans to reduce the business rate discount given to empty shops and offices, from 50 per cent to just 10 per cent, amid extraordinary claims from Local Government Minister Derek Mackay that landlords were deliberately leaving buildings empty rather than trying to find tenants.

In England, the business rate discount for empty properties was reduced to zero in 2008 by the previous Labour Government, making the owners liable for full business rates. Shops and offices had received a 50% discount, while industrial property was exempt.

The tax hike was opposed by several members of the current Government while in opposition but since taking power, ministers have moved only to cut the relief still further by removing an exemption from empty rates that had been granted to buildings with a low rateable value.

Responding to the SNP tax hike, Scottish Conservative Local Government Spokeswoman Margaret Mitchell said: "There is only a handful of business premises that are closed wilfully, the huge majority are empty because of the economic climate. This measure clearly will not help that, and in fact it will have the opposite effect and could even tip some firms over the edge."

Liz Peace, chief executive of the British Property Federation, said: “We are pleased to see that the Scottish Conservative Party recognises how damaging empty rates are to both the property industry and the wider economy, and would urge the UK Government to consider the concerns that they raise.

“It is ridiculous to claim that landlords are keeping buildings empty deliberately. There are so many incentives not to – the foregone rent, the cost of holding empty property and the negative impact on the value of the surrounding area, to name just a few.

“There is no evidence to suggest that this tax hike will bring buildings back in to use. Our experience in England that instead it will lead to the demolition of perfectly usable buildings and choke off the development of new business space – particularly for SMEs, who rely on a steady supply of vacant property in which to grow.”