Rating (Empty Properties) Bill

As the hon. Gentleman probably realises, the answer to his question is problematic. We can never be certain about the intent of landowners and their possible reasons for keeping property vacant. What we do know—because they have been published by the Department for Communities and Local Government—are the vacancy rates of properties that are eligible for empty property relief, which show some striking patterns. In Birmingham, where I do not think anyone would argue that demand for property is particularly low, a fifth of rateable value property is not just empty but the subject of claims for empty property relief. In the City of London, the proportion is 16 per cent. The existence of such oddities in the system underlines the argument for reform and a more sensible and efficient regime. That was certainly Kate Barker’s conclusion in her analysis of land use in England. She outlined the beneficial effects of reform of the rating of empty property, stating, for instance:"““development is encouraged on sites which have already been developed, which reduces the need to build on greenfield sites and improves environmental outcomes.””" In accepting Kate Barker’s recommendation for reform, the Government also asked Sir Michael Lyons to consider the case for change from the point of view of local authorities and local authority financing. The nature of the representations that he received from local authorities across the country, which are aware of the local impact of the current empty property relief regime, was very revealing. A number of authorities expressed the strong opinion that it should be reformed. Hampshire county council, in the constituency of the hon. Member for Fareham (Mr. Hoban), said simply ““Yes”” to the proposal for reform. It therefore came as no surprise when Sir Michael—agreeing with Kate Barker—concluded:"““Analysis shows that vacant property is found in areas of high demand as well as in areas of low demand and former industrial areas.""Finding ways to raise the opportunity cost of holding unused land and property in areas of high demand at such a time would be desirable. Reforming the empty property relief would help to provide this, and thus assist local authorities in their place-shaping role.””" The Chancellor accepted those recommendations in the Budget, and the Bill legislates for the reform. The Bill, although short, has four principal elements. First, it will increase the empty property rate from 50 per cent. to 100 per cent. of the occupied business rate for all properties. At present empty industrial property is, through regulations, exempted from the 50 per cent. rate. In the light of evidence in Kate Barker’s analysis that holding one type of property involves no difference in risk, those regulations will be amended to equalise the tax treatment of all empty property—albeit with six months relief of industrial property rather than the current three months, which will remain for empty retail and offices premises. We believe that that will give owners a strong incentive to re-let, redevelop or sell on empty non-domestic buildings, thus reducing the need for new development on greenfield sites and increasing access to existing premises for businesses, which will help to reduce rents overall. Secondly, the Bill provides for a zero rate on empty properties owned by charities—as announced by the Chancellor—and those owned by community amateur sports clubs. Many such bodies play an important role in regeneration and heritage projects in all our constituencies, and the Bill will give a significant boost to the Government’s support for the activities and commitments of the third sector and community sports clubs. Thirdly, the Bill provides a power to return the empty property rate from the new level of 100 per cent. of the basic occupied rate to a minimum of 50 per cent. of that rate. It is a reserve power, which will ensure that in future any Government will have flexibility to respond to changing or prevailing conditions in the property market. Fourthly, the Bill provides a power to tackle rate avoidance tactics by disregarding changes to the state of property in circumstances to be defined in regulations. For example, if an owner removed the roof of a property for rating purposes, it could be valued as though the roof had not been removed. Property development and investment are key parts of the United Kingdom’s economy and the Government are well aware of the role that they play in its present and future success. I therefore want to ensure that we respond to the main issues raised by industry bodies. Since the Budget, we have had received useful representations from professional bodies. In general, they have welcomed the Bill’s intention, and although they have raised concerns about its likely effects I am confident that we can deal with them.