Tuesday, March 25, 2008

Unintended consequences

Well, whadda you know? When the state passes laws, they often have unintended consequences; who would'a thunk it?
Ministers intend to take steps to counter a threat by property developers to leave buildings unfinished in an attempt to dodge an impending increase in business rates.

The measures, which are due to be announced this week, pit the Government against increasingly angry commercial developers - as the Treasury tries to raise an additional £1 billion in business rates from buildings that are unoccupied.

John Healey, the Local Government Minister, will ask local councils to make better use of existing powers, including forcing developers to speed up the completion of building works so that they cannot dodge taxes by leaving buildings incomplete.

Owners of unoccupied commercial property currently pay little or no business rates but the Government is planning to cut the existing reliefs from next month. That prospect prompted Ian Coull, the chief executive of Segro, to threaten to leave the roof off new unlet developments to avoid the rates bill.

Fuck, but we are ruled by fucking morons. Bloody hell, this cunting government just make me feel so fucking weary.

I can't be arsed to expand on this subject: why don't you wander over to The Englishman's Castle to learn how Brown and his moronic cronies have failed to learn the lessons of history...?


Unity said...

Hehehe, I see the old Greek trick is finding its way to the UK.

I don't know if they've closed the loophole these days but at one time Greek home-owners were exempted from paying property taxes on unfinished properties, so they used to routinely leave a beam sticking out of the top of house and claim they were going to add an extra floor later, in order to avoid paying the tax.

That said, and looking at what's being proposed, while I'm might query whether the rate relief periods under the new scheme are quite long enough - 6 months for industrial property and three months for other commercial property are fairly tight if you're letting new build or property that's in pretty good nick - the underlying principle of using tax as a lever to nudge the market along is not a bad one if used correctly. It is, after all, an incentive for developers to let properties as quickly as possible as well as an disincentive against speculative developments which lead to over supply.

If there's a real problem in this then it lies in the fact that this is being done through a centralised and inflexible national system, rather than being done locally, giving councils a means of adjusting the system to suit local market conditions in concert with greater flexibility in the local planning system.

In theory, if you were to simplify the planning system and reduce developer's costs by cutting out much of the bureaucracy, and put in place a flexible local system of property taxation which could be adjusted according to local market conditions then you'd have fairly effective and less bureaucratic set of levers for dealing with commercial development, one in which developers would only lose out if they misjudge the market.

Mark Wadsworth said...

This is easily fixed.

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