The government’s decision to scrap rate relief on empty industrial property and phase out the Industrial Buildings Allowance is likely to be “damaging” to the logistics industry, according to UKWA chairman Derrick Potter.
If a warehouse is empty for longer than six months it is now liable for empty property rates, which are equal to the fee paid on occupied properties. Potter explained that on a typical empty 100,000 sq ft warehouse the potential rates bill could reach £250,000.
He said: “Ministers justified this new tax on the grounds that these reforms will provide an incentive for owners to re-use, re-let or re-develop their empty properties and will increase the supply of commercial property available to new and existing businesses, thereby helping to reduce rent levels which burden the competitiveness of the UK.
“The government considers that the reforms will provide a strong incentive for owners to bring empty shops, offices and warehouse buildings back into use, and so improve access to property and reduce rents for businesses.
“One doesn’t have to be too cynical to view this as simply another tax raising move.”
Potter, who is founder and executive chairman of logistics company The Potter Group, also criticised the government’s decision to phase out the Industrial Buildings Allowance, which currently stands at four per cent, but will be cut by one per cent each year for the next four years.
He added: “A great many warehouse operators will have factored the Industrial Buildings Allowance into their costings when pitching for contracts and the decision to phase out the allowance will have a direct impact on their bottom line profitability.
“With the global economic situation and the high price of fuel, these are difficult times for our industry. The government has only added to our problems with its moves to scrap the Industrial Buildings Allowance and reform the empty property rate rules.”
