EPR Cause Instability in UK Commercial Property Market

The results of a survey, conducted by RICS and Lambert Smith Hampton’s Empty Property Rates, were published on April 21st. They suggest that Empty Property Rates (EPR) might lead to instability in UK non-residential property market because property owners are increasingly preferring demolition in an effort to avoid paying rates. The results of The Empty Property Rates Survey show that 93% of property owners believe that empty property rates, which were introduced a year ago, aggravate the financial difficulties of both, property owners and property occupiers. Statistics demonstrate that the controversial introduction of empty property rates led to an increased demolition of perfectly sound properties; survey results also showed that 75% of respondents agreed that increased demolition was caused by EPR introduction and 85% of respondents said demolition was a way of avoiding taxes. All sectors saw a decrease in investment in new property, which is supported by the survey data with 79% of respondents agreeing that EPR have a harmful effect on town regeneration and development. EPRs might result in the shortage of commercial property when the economy turns around. The problem of demolition is expected to hit hardest in the next few months as survey results indicate that property owners wait for an average of 12 months before they consider demolition. RICS Director of External Affairs, Mr. Charlesworth said that although government’s intentions were positive when they first introduced the tax, recent recessions proved that the rates have a negative effect and cause even more damage to the already suffering property sector. He also said that the results of the survey represent evidence-based facts that support the need to reform the unpopular tax.