By Daniel Hunter

The British Property Federation has called for urgent action to boost investment in the built environment after new research revealed that Government’s tax on empty property was draining more than £1 billion a year from businesses.

The BPF called for relief from empty rates to be extended to allow businesses to bring vacant shops, offices and factories back in to use in next week’s Budget, as figures showed that local authorities collected £1.1bn in empty property rates in 2011/12 — up from £970m the year before.

Today marks the first time that industry has been able to ascertain the cost of the empty rates tax. Despite the dire impact of empty rates (see notes below), Government has never attempted to quantify its impact on the economy, or the way in which it distorts investment decisions.

The Chancellor announced in last year’s Autumn Statement that he would introduce limited relief for new development. While welcome, the BPF said that this would have an extremely limited impact on construction and growth, and would do nothing to help bring vacant property back in to use.

“As well as distorting investment decisions and causing hardship to already struggling businesses, we can now see that empty rates are draining more than £1bn a year from those holding unproductive property — money that could be saved to support jobs or re-invested to bring these properties back into use," BPF Chief Executive Liz Peace said.

"While welcome, Government’s intention to increase empty rate relief for new development is only a small step in the right direction. In particular, relief should also be available to support a more flexible range of risky but valuable activities including refurbishment and conversion.

“These figures reinforce a picture of ever-increasing costs to developers, at a point in the economic cycle when Government should be doing everything it can to remove barriers to development and investment in the built environment. The growing tax burden is making positive, growth-enabling development and investment decisions even harder in what are already challenging economic conditions.”

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