Wednesday, Aug 13, 2008
Changes to tax on empty commercial property has interesting side-effects
Independent: Buildings destroyed after rate relief is abolished
Landlords of retail and office property now have to pay full business rates after a three month grace period – whereas previously they received 50 per cent tax relief. A Treasury spokesman said: "Reforms to empty property relief are aimed at ensuring a fair balance between incentives to re-let property, and giving property owners a period of relief while they manage vacancies." Needless to say, the landlords aren't happy about what is effectively a Land Value Tax, even though economists agree that LVT is one of the best and fairest possible taxes.
Posted by drewster @ 02:41 AM (788 views) Add Comment
14 Comments
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1. drewster said...
Also related article:
2. Mark Wadsworth said...
When people talk like this (from the article), making sure to use a load of politico buzzwords ...
"[Opponents of the tax on empty buildings] argue that it is small businesses in some of the countries most deprived areas that will feel the full force ... and small private property investors will not be able to pay the additional tax burden. There is also a fear that small businesses will not be able to find affordable ... office space and that when the economy does return to full steam there will be a dearth of commercial properties on the market. "The result will be a slowdown in the regeneration of deprived areas ..."This is an ill-conceived move that is hurting regeneration and reducing the supply of affordable property that is essential for business. Empty rates contradict not only the Government's supposed commitment to delivering sustainable communities but its promise to support business."
You know that they're talking cr4p. Problem is, the gummint is so DUMB that it didn't go the whole hog and replace Business Rates with Site Value Rating/Land Value Tax. Obviously, the gummint have never heard about the Window Tax.
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4. it_is_going_with_a_bang said...
I'm sure there are arguments for both sides. but personally I've seen too many commercial property owners sitting on empty property on purpose. It's time for change.
If they don't want to pay the rates then sell the property. Instead they demolish it - thus showing us all what it is all really about which is land ownership and hogging it.
It's about time a land value tax is introduced to curb the use of land banks.
5. maddison said...
One of the reasons that LL do not relet buildings at low rents is because it would distort the rental value on their other buildings in the area. Leases have rent reviews and comparable properties are used as evidence. If an empty buidling/floor is relet at a very low rent an encumbent tenant, in the floor above or next door, could say at their rent review that the market rent is actually much lower. This would have adverse effects on the LL cashflow. This is why many commercial properties are "deliberately left empty"
6. Stevie Dee said...
@ maddison, but surely what you are describing is a "free market", hardly a bad thing. If a tenant realises their rent is too high, then the landlord has to accommodate to remain competitive. Or face paying the rates. My advice to dissenting commercial landlords, LEAVE THE COUNTRY & take your families, mistresses and misery with you.
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8. montesquieu said...
Another example of how Broon & co have lost the plot entirely. fiddling at the margins with stealth tax taxes with no regard to the law of unintended consequences.
This sort of thing is what sir humphrey and his friends are paid to think through, and if necessary stop (or at least slow down) a government from acting stupidly. It seems the treasury mandarins have lost all power of thinking (or at least of doing anything).
9. maddison said...
Basically, since Gordon left the Treasury they are all running round like headless chickens incapable of making sensible decisions.
10. Mark Wadsworth said...
@ Itisgoingwithabang "It's about time a land value tax is introduced to curb the use of land banks".
Amen, brother!
@ Maddison #9
Better headless chickens than Stalinists!
11. d'oh said...
Agree with the above posters. Land value tax based on zoning...that'd stop this jiggery pokery. Mind you, I don't know the average per annum amount of these taxes, but they have to be pretty swingeing for someone to demolish a building to avoid them...ouch.
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