Politicians ‘at loggerheads’ over empty property tax
Nov 20 2008 by Sue Scott, Evening Gazette
STORM clouds were gathering in Westminster today following an alleged Cabinet fall-out between North East politicians Nick Brown and former Hartlepool MP Peter Mandelson over a tax that’s forced some landlords to demolish empty commercial property rather than wait for it to be filled.
The Empty Property Rates relief was repealed in the teeth of bitter opposition from businesses earlier this year, leaving some landlords facing six-figure bills on premises that were not earning them a penny.
The row has now escalated into a backbench war, with many of the Government’s own party putting pressure on Chancellor Alistair Darling to reinstate the relief when he comes to the Commons with his pre-Budget report on Monday.
Labour MP for Middlesbrough South and East Cleveland, Ashok Kumar, who is among 120 MPs to have signed an early day motion calling on the Government to abolish the tax, said: “In these troubled times securing rate relief on empty properties could be critically valuable to many small firms as that cash amount could make the key difference between expansion or contraction.”
In recent interviews with the nebusiness, Mr Brown has given broad hints that there may be room for a temporary concession, putting him at odds with Business Secretary Peter Mandleson who argues that the tax forces down rents which is good for small business. But Mr Brown denied accusations that he wanted preferential treatment for the North-east.
In a statement today, he said: “Empty property rate relief is an important issue across the whole of the UK at this difficult economic time. I am relaying concerns on this matter to the Treasury as I have been asked to do by businesses, in my capacity as minister for the North-east of England.”
Stephen Rose, commercial sales and lettings manager for Stockton developer Mandale, which has just completed a 45,000sq ft speculative office development in Newcastle, welcomed moves to reinstate relief but said the company had so far managed to “absorb” the additional cost.
As the law stands, if it fails to find tenants within the next three months, Mandale will be facing a bill in excess of £200,000 and Mr Rose said as the deadline drew closer, the temptation grew to strike “soft deals” several pounds below the advertised rate of £18sq/ft on the basis that “getting something in and not having the liability is better than holding out”.
But he added: “It’s no good having tenants and still losing money. You have to find a balance.”
Many developers will plan to offset such soft deals with heftier rent reviews after three to five years, bringing them back up to market level. But there was always a danger of undervaluing a company’s assets, said Mr Mandale, and developers could find themselves over a barrel when it came to negotiating with existing tenants on higher rates.
The company said it was still attracting interest in the multi-million pound Portrack Lane trading estate at Stockton, the first phase of which was 50% let within six months of its completion in spring this year, said Mr Rose. Early tenants at the 60,000sq ft development include Screwfix and around 40 jobs have so far been created.
“We would like to think we will get one or two more away soon,” he said.
