The implementation of the Rating (Empty Properties Act) 2007 in April of this year is already causing major disruption across the business and property community both regionally and nationally. Here Mike Murray, Longbridge senior development manager at the UK’s expert in regeneration development, St. Modwen, explains how it has led to the demolition of one of Britain’s largest freestanding buildings.
The controversial act, which sees full business rates applied to properties empty for three months or more, was approved by the Chancellor in March and was introduced to provide a strong incentive to bring empty property back in to use.
In a nutshell, the theory behind the legislation is that let buildings generate more wealth than empty buildings, which in turn boosts the economy while removing the negative impact of empty buildings on local communities. The problem with this – like so many other theories – is that under critical examination it does not make sense.
The reality is that this legislation, far from boosting the economy and strengthening UK Plc, is actually having a detrimental effect, turning the property industry en masse against the Government.
As the country’s leading expert in regeneration our opposition to this legislation surrounds two key issues, namely that building owners should not be penalised for a building being unoccupied and secondly the measures that are having to be undertaken to avoid falling foul of this imposition.
As a national developer with a significant portfolio of properties, this is a piece of legislation that goes to the very heart of our business. At any one time, for a multitude of reasons, St. Modwen owns properties that will be standing empty.
Now empty buildings don’t make good business sense – they never have. They are not cheap to maintain and they provide no income to the owner. Buildings are never deliberately left vacant – we work extremely hard to ensure that as many as possible are let and thankfully, across our national portfolio, the ratio of vacant buildings is extremely low.
Now as unhappy as we are with this new legislation, its imposition on St. Modwen is not as severe as it could be – until you factor in Longbridge. St. Modwen acquired the vast Longbridge site almost three years ago and since then we have been working on a £750m vision to transform the 468 acre area into a sustainable community with new jobs, houses and facilities for the people of south Birmingham.
Being a former car assembly plant, our acquisition came with some of the largest buildings you will ever see and at 750,000 sq ft, the West Works building was large enough to fit in Brindleyplace – with room to spare.
Now eventually the West Works building would have had to go. In the long term the majority of the site will be completely cleared, remediated and transformed.
However, this is a long term project, it will take a decade or two to get to where we want to be and in the short term, the West Works building was very much part of our plans. Having spent £300,000 on upgrading it, we hoped to let the building as a going concern, immediately bringing jobs to the area and creating an income to help plough back into the regeneration. Unfortunately this Act has put a stop to that.
Faced with an annual empty rates bill of £697,700 – that’s £2,300 per day – before we even consider the other maintenance costs, the building became completely economically unviable.
Our real issue with this legislation, what makes it so hard to take for us as a company, is the fact that to avoid this extreme tax, we have had to pull down what is essentially a sound building which could have continued to play a role in the regeneration of Longbridge and in the interim, provided valuable jobs to the area.
St. Modwen has not grown to be one of Europe’s leading regeneration development specialists just by bulldozing the old and replacing with the new. Of course, the renewing of the heavy industrial areas that made the UK great can sometimes be a brutal business – just look at the army of bulldozers that have had to flatten other parts of the Longbridge site – but to ignore the existing fabric on many former industrial sites, is to ignore an opportunity.
In towns and cities across the UK, historic buildings of numerous former uses are being reborn and forming the centrepieces of regeneration schemes and while its sheer size meant there was no long term future for the West Works, in the short term it was pivotal to bringing on our ambitious plans at Longbridge.
With all this in mind, it is difficult to see this new legislation as anything less than rampant opportunism. Unfortunately it may well end being an opportunity lost as Bill Oliver, chief executive of St Modwen, believes that the legislation is already having a detrimental effect on regeneration schemes up and down the country. He said:
“Companies like St. Modwen are helping to renew the UK’s urban areas and are doing so at a considerable cost and with no small amount of risk. The Empty Properties Act is completely counter-productive in promoting regeneration. This measure is killing speculative schemes, as companies are not committing to building unless they can guarantee a prelet or presale.
“Property companies are now facing the situation whereby many of their brownfield sites, due for redevelopment, are being demolished and sitting barren, until such time that the planning process and economic climate allows development to progress.”
St. Modwen hopes to completely transform Longbridge by delivering a new employment-led heart for the area. We submitted four major planning applications to Birmingham City Council and Bromsgrove District Council earlier this year, outlining St. Modwen’s vision for the 468 scheme.
Over the next two decades, we are focused on creating 10,000 new jobs and 1,980 new homes. There will be improved transport links alongside new community facilities and public space, including a new town centre for Longbridge. A learning quarter will be anchored by the relocated Bournville College, which has unveiled its plans for a new £84 million college.
It is too late for the West Works now, but there are currently plenty more West Works on the verge of extinction if this legislation is not repealed. In these current uncertain economic times, we need strong affirmative action to generate activity and regeneration. The Empty Properties Act is halting investment and needs to be overturned now.
For more information please contact:
Sally Earl, Core 0121 643 8151
Mike Murray, St Modwen 0121 222 9400