Revealed: How much do empty businesses in Havering cost the taxpayer?
PUBLISHED: 07:00 16 January 2020
Empty businesses in Havering are costing taxpayers an average of £2.8million in lost rates each year due to a national relief scheme.
From Romford's Mothercare to Swan Books in Corbets Tey Road, Upminster, businesses big and small have announced they are closing over the past year.
Empty shops, offices or warehouses do not have to pay business rates for three months and are subject to a tax relief which allows for property investment.
It also gives landlords time to find a new occupant.
Over the past five years in Havering, £14.3million of potential business rates income has been lost due to empty premises.
In 2018-19, landlords in the borough were exempt from paying £2.5m of rates under the national relief scheme and the council collected £78m in rates for all businesses according to data released by the BBC's shared data unit.
The amount paid out in relief amounted to 2.6per cent of the total rates payable in that area.
It's important to note that councils do not get to keep all the rates revenue they collect as central government usually takes a sizeable share.
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Next year expects to be slightly better for Havering as it is forecast to lose around £2m in rates relief which is about a 2pc loss.
Out of 6,100 taxable business units in the borough, the council told the government 214 (3.5pc) needed empty premises relief.
According to figures from the BBC, the cost to the taxpayer of empty businesses has now risen to more than £1billion a year across England and Wales.
The government has promised some councils 75pc retention of any growth in business rates from April 2021.
Property tax expert Dr Kevin Muldoon-Smith said business rates were critical to the stability of local authorities going forward.
He said: "We have this perverse situation where local government needs tax to go up and the business community are lobbying very hard for it to go down."
Havering Council has been contacted for comment.
While, another expert, Professor Paul Greenhalgh, said vacant business properties can start blighting an area.
"You sometimes find you get to a tipping point where if one in four shops in a shopping centre are vacant you can tolerate that but when half the shops are closed you start losing footfall and customers and then you're on a slippery slope."