Zero tolerance approach to commercial vandalism

He today set out tough measures that councils already have to tackle potential moves by owners to try and avoid liability, and gave a zero tolerance pledge to intervene with further measures if evidence suggests deliberate dereliction of properties is taking place.

Changes to the out of date system of reliefs remove perverse incentives to keep buildings empty, and encourage owners to bring them back into use, helping to revive high streets and town centres.

Businesses that rent premises will particularly benefit through an increase in the availability of properties, thereby reducing rents and increasing the UK's competitiveness. Charities, community amateur sports clubs and companies in administration will also be granted a complete exemption from rates on their empty properties.

In December John Healey ruled out immediate anti-avoidance legislation to prevent commercial property owners from removing roofs or deliberately rendering their properties derelict, as evidence shows the risk of this happening is low, but he gave a strong commitment that the option remained on the table.

Delivering a warning to those considering deliberate dereliction today he said that work is already underway with the Local Government Association, the Valuation Office Agency and the Institute of Revenues Rating and Valuation to monitor the impact of the reforms and assess whether new regulations should be introduced in future. He made it crystal clear that he will keep the situation under close review and will not hesitate to act on further anti-avoidance measures if necessary. Writing to every billing authority in the country he also spelled out wide ranging and tough powers they already have in place to prevent deliberate dereliction including to:

• Make owners take action to clean up any high street, town centre or rural site, derelict or semi-complete building if they are 'adversely affecting the amenity of the local area'. If the owner does not comply councils can take action themselves and recover the costs.
  Councils are encouraged to use this power proactively, and research has shown quick and overwhelming compliance. (Section 215 of the Town and County Planning Act 1990). 
• Order the completion of a development if it is causing an adverse affect on its surrounding and the planning permission period has expired. (Section 94 of the Town and County Planning Act 1990).
• If the work can be reasonable expected to be completed within three months the building shall be deemed to be completed on the day specified in a notice from which date rates will be payable in respect of the building. (Section 46A of, and Schedule 4A to, the Section 46A of the Local Government Finance Act 1988).

John Healey said: "These reforms are good for businesses, the environment and most of all, good for our communities. No-one wants to live or work in a ghost town of empty offices and closed-down shops. These changes will help bring empty buildings back into use, reduce rents for small independent shops and create thriving high streets and town centres.

"Commercial property demand remains high and there can be no excuse for deliberate dereliction.

"It would be an extreme step for a property owner to go to the lengths of deliberately vandalising their asset. I do not believe this is likely, and I expect the property industry to adapt in a responsible manner.

"But I will not tolerate any deliberate dereliction and will act on new anti- avoidance measures if necessary. That is why I will be monitoring the situation closely and why I am reminding councils of their powers to safeguard local areas from potential commercial vandalism."

The reform of empty property relief is part of a wider package designed to increase UK competitiveness and promote more efficient land and property markets. Measures such as the new 100% capital allowance for renovating or converting empty business property in Assisted Areas will encourage owners to bring empty properties back into productive use and discourage deliberate dereliction.
At present, most empty commercial property receives a 100 per cent relief from taxation for the first three months, and 50 per cent thereafter; and empty warehouses and factories receive a permanent exemption from rates.

However, the current system of providing tax relief for buildings that sit empty can no longer be justified when UK office rents are among highest in the world. From 1 April 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, community amateur sports clubs and companies in administration will be granted a complete exemption from rates on their empty properties.

CBRE research report on Global Market Rents (November 2007) found that 7 out of the top 20 most expensive office occupation costs were British towns and cities.

At the same time, the amount (by value) of empty property in the City of London has doubled since 1999 - up to 16 per cent in 2004-05.

Other English towns and cities, like Manchester, Birmingham and Slough faced similar problems in 2004/05 with up to nearly a fifth of all commercial properties empty.

The proportion of commercial properties lying empty in 2004/05 in London (11%) is higher than the national average (9%), and Hackney has the highest proportion empty in the country (28%).

A list of the proportion of empty commercial property by local authority is available at: Commercial and Industrial Property Estimated Vacancy Statistics: England, 2004/05