The Chancellor has announced that the discredited Empty Property Rates (EPR) legislation of 2007 may be up for reconsideration. However, more action is required.
The EPR legislation, an unmitigated disaster since its introduction, has actively dampened the commercial property development market and irreparably damaged many businesses. Adding insult to injury, its disastrous effects on the market were entirely predictable. Yet it has taken five years, and the misery of economic recession, for those in power to garner the political will to listen to the marketplace and finally embark on change.
EPR legislation has been a disaster – but the government is beginning to take action
The government is beginning to take action on EPR (which cynics may argue is influenced by the £70m EPR charge they face next year). Chancellor Osborne has appointed a group of seven MPs to form a working group which will set out proposals for change. Chief among those is understood to be a three year EPR exemption for new developments, designed to remove the unexpected rental void as a reason for not developing new grade A commercial space.
EPR legislation should be altered substantially
We have been calling for the EPR legislation to be altered substantially or rescinded since its first introduction. The Chancellor’s initiative is to be welcomed, but this action in isolation does not go far enough. In order to address the issues facing the commercial property industry, a number of rates related measures are required:
Chancellor’s actions so far
- A suspension of empty rates charges on new projects, to encourage new speculative development
- 100% rates exemption within Enterprise Zones for a limited initial period
Our proposed actions
- The abolition of downwards phasing in England, in order to speed up the positive effect of rates reductions for occupiers
- Hardship relief for businesses for a maximum of one year, funded from a central pot
- Centrally funded discretionary relief for businesses holding partially occupied premises
Together, these initiatives would energise the commercial property development cycle, bringing more high quality stock into the marketplace and, importantly, generating much needed jobs in the construction sector. Ideas for kick-starting the economy abound. This time the government must listen to the experts and act on our advice.