Buildings demolished to shun rates tax, says Irwin Mitchell
Buildings in the West Midlands are being torn down to avoid paying empty rates relief, according to law firm Irwin Mitchell's Birmingham office.
Alex Curtis, associate solicitor in the firm's real estate division, said there was "clear evidence" of empty buildings being demolished early rather than offered to the market on short leases.
His comments come as the British Property Federation (BPF) instigated a new petition calling for the governemnt's decision to lower the empty rates relief threshold to be reversed.
Until legislation was introduced in 2008, industrial property landlords paid no business rates on empty buildings. After the review, industrial property owners pay no rates for a period of six months and thereafter pay 100 per cent of the rates.
As a concession, the government allowed for "targeted relief" for any empty property with a rateable value below £18,000. From April this year, this has been lowered to £2,600 rateable value.
The BPF estimates that this will cost businesses an additional £400m a year.
Curtis said: "Being required to pay full business rates on empty premises is a serious problem for developers and landlords, exacerbating the issues that many are already facing in the current economic climate.
"The reduction in the targeted relief will inevitably mean more developers and landlords are forced to consider whether to demolish empty buildings as they may not be able to afford to pay empty rates."
