The government’s failure to cut the tax burden on owners of empty commercial property is partly to blame for a shortage of usable warehousing and storage space that is stifling Britain’s economic recovery, the United Kingdom Warehousing Association has warned.
And it is now seeking talks with business secretary Vince Cable in an attempt to move the matter up the political agenda.
UKWA chief executive Roger Williams said: “The fact is that the tax has not only encouraged the early demolition of older empty warehouse buildings but could also be said to have discouraged the construction of new speculative warehouses.
Warehouses became liable for empty property rates in 2008 – at the same rate as occupied buildings. As a result many warehouse owners have simply demolished buildings.
With a fall in speculative new-build developments since the start of the recession, the logistics industry is now facing an acute lack of good quality, affordable warehouse and distribution space.
“When the empty property rate tax rules were changed in 2008, ministers justified the move on the grounds that the reforms would provide an incentive for owners to re-use, re-let or re-develop their empty properties,” said Williams
“It was also felt that the changes would result in an increase in the supply of commercial property available to new and existing businesses, thereby helping to reduce rent levels which burden the competitiveness of the UK.
“Neither of these things has happened.”
And he pointed out: “Anecdotal evidence suggests that the tax has not brought in anywhere near as much revenue as was originally forecast. But it has clearly had a very negative impact on the warehousing sector and if it is not addressed it will continue to have implications for the broader UK economy.”