Factory flattened in business rates row (From York Press)

Factory flattened in business rates row

9:47am Saturday 29th November 2008 in

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A FACTORY which stood for decades in York is being flattened by its owners – to avoid having to pay rates on the empty building.

Electronics firm Bio-Rad is spending about £300,000 on the demolition of its premises in Haxby Road, formerly the Vickers factory.

Richard Flanagan, the company’s agent, said today it had ordered the demolition partly to make the site safe and secure, but primarily because of new legislation making owners pay rates on empty buildings.

“The premises have a Rateable Value of £397,500 and with the Uniform Business Rate for 2008/9 being 0.462 this produces an annual rates payable bill of £183,645!” he said.

“The intention is to sell the site for redevelopment, and we are all aware how lengthy this process is, particularly when we will be inviting offers on a subject to planning basis. “This of course means that my clients will not be in receipt of the proceeds of any sale until planning consent has been obtained for the scheme submitted by the preferred developer as purchaser.

“Assuming this could take two to three years (for the sale process and planning process combined) then the rates liability would be between £367,290 and £550,935.

“Spending £300,000 now therefore will save my clients money in the long run, and they are indeed fortunate to have the capital available to fund the demolition.”

Coun Ian Gillies, Tory group leader on City of York Council, said the empty buildings rule meant York had lost another factory building that could have eventually provided employment for the city.

He is calling for the Rating (Empty Properties) Act 2007, which came into effect in April and which cut tax relief on empty commercial buildings, to be suspended.

He said that, before April 1, empty offices and shops were exempt from business rates for the first three months they were unoccupied, and then only had to pay 50 per cent of the rates thereafter. “Empty industrial properties had a complete exemption. With the new legislation, empty offices and shops now have to pay 50 per cent of the taxes during the first three months they are unoccupied, and then must pay the full amount. “Empty industrial properties now have to pay 50 per cent for the first six months, and then the total amount thereafter. The original reason for taking away tax relief on empty commercial properties was to encourage developers not to leave buildings empty and to assist in urban regeneration. It was hoped the tax would cause a reduction in rents and an increase the supply of business premises.

“With the economic downturn there has been a surge in vacancy levels across all commercial property sectors. Smaller firms, which now face extra rates on an empty property, are being pushed towards bankruptcy.”