Government scheme ‘misses opportunity’ – CBRE
THE government’s new scheme to exempt all newly built commercial property completed between October 1 2013 and September 30 2016 from empty property rates tax won’t stimulate construction activity in the region, a leading property expert has warned.
Robin Ellis, director of national rating and lease consultancy at CBRE in Leeds claims that the scheme’s limits mean it won’t act as enough of an incentive for new development and that an opportunity has been missed to include smaller scale refurbishment projects.
The guidance document produced by the Department of Communities and Local Government states that the purpose of the scheme is “to help stimulate construction.”
It says that construction decisions take into account the risk of paying empty property rates on newly built commercial property if the property does not become occupied straight away. Reducing this risk may incentivise some commercial property projects to go ahead that wouldn’t otherwise, helping to stimulate the construction industry.
Ellis said he disagrees that this will occur in Leeds. He said: “Most office developments in Leeds require pre-let commitments of at least 70% before development funding can be secured.
“There are numerous sites in the pipeline including Wellington Place (1.14m sq ft), Whitehall Riverside (500,000 sq ft) and Sovereign Street (90,000 sq ft). The relief will only be applied up to the State aid limit of circa £175,000 over a three-year period. This is relatively insignificant compared to the cost of construction of schemes such as these in Leeds and will not be sufficient to stimulate new development.”
In Leeds city centre, according to Ellis, there is at present some 840,000 sq ft of vacant second-hand space which he argues could benefit more from this relief.
“Had the scheme been targeted at smaller scale offices, requiring refurbishment to bring them up to current standards, then it would have had a more significant impact on the fabric of the city,” he said.
