Rating (Empty Properties) Bill

My Lords, I thank the Minister for setting out the mechanics of the Bill and explaining how the Government have concluded that it has merit. Unfortunately, I cannot agree with him on that. However, before going further I should declare an interest as chairman of a property development company with interests in commercial property. Nevertheless, I trust that noble Lords will accept that what I shall say about this Bill is based not on self-interest but on experience gained over a number of years. The Lyons report, which has been prayed in aid by the Minister, never argued for the introduction of this measure in isolation. Indeed Sir Michael explicitly said that any change should occur in 2010 and only after extensive consultation. If this Bill is enacted it will come into effect next year, which allows an unreasonably short time for action to be taken by responsible landlords. The main thrust of the argument in the Lyons report for introducing this legislation is to influence commercial rents and capital values. The Lyons report says that, "““the effect across the economy would probably be a fall in future rents that would benefit property occupiers. This might be accompanied by a fall in capital values, which would have no impact on current owner occupiers (assuming that they wanted to continue using the same or more property in the future) and a positive benefit for future purchasers””." Noble Lords should note the use of the words ““probably”” and ““might””. However, I fear that this is an incorrect summation of what would happen and actually illogical. In most cases empty buildings are unoccupied not because the rents asked by the landlord are too high—quoting rents are governed by market conditions—but because there is no demand for the type of space in question. Unless market conditions are very strong, such as in London offices at the moment, landlords do not hold out for higher rents, but look to get the building producing income at the market level of rent. As for Sir Michael Lyons’s dismissive regard for the fall in capital values, I beseech your Lordships to spare a thought for the many millions of people in this country who have at least some exposure to property as an investment class in their pension funds. I am sure that the Government do not wish to strike another blow against pensions, but that is what they will surely do if this Bill is passed. How many property owners have long-term strategies for leaving buildings empty when they could find tenants or change the use? In my experience, buildings are left empty only due to market conditions or planning policy restricting a change of use. It is surprising, to say the least, that this Government, who support the twin ideals of sustainability and regeneration, are pressing ahead with this Bill. I regret having to say it, but there is a real risk that it will prompt the decommissioning of very useable buildings. Apparently, the Federation of Small Businesses supported the measure, which seems to have given the Government the green light to proceed. No mention is made of the fact, however, that the British Property Federation, the British Retail Consortium and the Royal Institution of Chartered Surveyors are all deeply concerned about the effects of this legislation. I fear that this £1 billion tax grab, for that is what it really is, will slow regeneration, as landlords become less willing to take risks on unestablished locations. I can only hope that the secondary legislation that will follow in the wake of the Bill will address the concerns that I and many others have.