A real estate asset management specialist is calling on the Chancellor to scrap the payment of business rates on empty commercial buildings in the Budget.
“Charging business rates on empty buildings is a tax on failure which is actively preventing development and refurbishment of commercial property across the West Midlands, especially in the less economically active areas,” says Tim Matthews, Chief Executive of Birmingham and Worcester based Blue Marble Asset Management.
“Empty buildings rates is a crippling cost for developers and investors, especially those which want to refurbish existing premises. It can have a devastating impact on cash flow and discourage investment in commercial properties which are often the driver of economic growth by providing the space where new jobs are created. For example, the refurbishment of a 25,000 sq ft Birmingham office block could bring an owner an annual rates bill of around £300,000, with only three months relief from this charge.
“It means that investors and developers are paying tax on property just because they are unfortunate enough not to have found an occupier.
“I would hope to see the first full Tory Budget show support for the commercial property developers and investors who help to create wealth and jobs by getting rid of empty rates once and for all.”
Introduced by Gordon Brown in the March 2007 Budget, at the top of the boom, owners of empty offices and shops have to pay business rates after three months and owners of unoccupied industrial buildings after six months. The Coalition Government brought in 18 months rates relief for unoccupied new builds registered for rates from 1 October 2013 to 30 September 2016. Presently there is no provision to extend this relief.
According to the IPF (Investment Property Forum) March 2013 Report “The Role of Commercial Property in the UK Economy”, the commercial property sector has a substantial multiplier effect on the rest of the economy, with each £1 of GVA generated in the construction and repair and maintenance sub-sectors being associated with an additional £1.09 GVA in other sectors, and each £1 of GVA in the commercial property real estate services sub-sector associated with an additional 42p in other sectors.
Blue Marble Asset Management is a real estate asset management specialist which presently has more than £60 million of property assets under management. It works for a select range of clients including investment businesses, high net worth individuals, trusts and family offices. Its business is based on taking a holistic view of each of its property investments.