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Housing: Empty Properties

Volume 697: debated on Monday 17 December 2007

My honourable friend the Minister for Local Government (John Healey) has made the following Written Ministerial Statement.

I have today published a summary of responses received in response to the Government’s stakeholder consultation document Modernising Empty Property Relief, and have placed a copy in the Libraries of both Houses.

The Government’s proposals for reforms to empty property relief were part of a package of measures introduced in the Budget to help incentivise the efficient use of land, to help increase the supply of commercial property and to reduce costs for businesses. The Government consider that the reforms provide a strong incentive for owners to reuse, relet or redevelop their empty shops, offices and factory buildings, and so improve access to property and reduce rents for businesses. The Rating (Empty Properties) Act 2007, which received Royal Assent on 19 July, gave effect to these reforms, and set a revised empty property rate of 100 per cent of the basic occupied rate.

Having considered the responses received to our consultation document, I can confirm that the Government will now take forward a number of additional measures.

The consultation document sought views on whether the existing permanent exemption from empty property rates available to listed buildings and those with a statutory protection should continue, or whether it should be varied. I have concluded that, on the available evidence, there can be a greater degree of work involved in bringing empty listed properties back into beneficial use compared to other properties and that the evidence supports such properties continuing to benefit from an exemption from empty property rates.

I have also concluded that companies in administration should benefit from a permanent exemption from empty property rates. This will bring them into line with companies that are in liquidation and individuals subject to bankruptcy proceedings. We are committed to the promotion of a rescue culture which provides opportunities for insolvent companies that have viable underlying businesses to be rescued wherever possible. A permanent exemption will remove any potential for decisions about whether to enter administration to be distorted by differences in rates liability.

I have considered carefully the responses to the consultation document about the potential risk of owners of empty property taking measures to avoid payment of rates on their property. The Rating (Empty Properties) Act 2007 gave the Secretary of State, and the Welsh Ministers, the power to make regulations to tackle any such activity. The consultation document set out a number of options as to how such regulations might be constructed if the Secretary of State were minded to make them.

There was a substantial body of comment about the proposed measures. I have concluded, on the basis of those responses, that the likely incidence of avoidance activity following the introduction of the reforms to empty property relief is low. It would be an extreme step for a property owner to go to the lengths of deliberately vandalising a potentially valuable asset so that it is beyond economic repair. This view was expressed by a number of respondents to the consultation document.

Having taken account of all the responses, I have concluded that the existing circumstances do not warrant the introduction of anti-avoidance regulations at this stage. However, I am clear that, if it appears that there is evidence of measures being taken by owners of empty property to avoid payment of empty property rates, the Government will not hesitate to use their powers. We will work 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 regulations should be introduced in the future.

We are now working on drafting the relevant secondary legislation to give effect to our reforms on empty property relief. This includes introducing the new six-month exemption from empty property rates for vacant industrial and warehouse properties, as announced in the 2007 Budget. We intend to lay this secondary legislation before Parliament so that all aspects of our reforms to empty property relief can come into effect on 1 April 2008.