A new government tax on empty buildings has prompted a huge rise in demand for demolition contractors as developers rush to flatten deserted properties, writes Dan Stewart.

Developers such as Brixton, Gazeley and Segro, and supermarkets Tesco and Sainsbury鈥檚 have demolished hundreds of empty industrial buildings to avoid paying annual tax of about 拢150,000 a unit on them. Segro is understood to have demolished 500,000ft2 of property since the beginning of the year.

Empty rates relief, which for years exempted developers from paying business rates on empty properties, was scrapped on 1 April this year.

Industrial developers were given a six-month grace period, whereas office and retail premises were exempted for three months. From 1 October, all empty buildings will be fully taxed unless they are unuseable.

Although the government has warned developers against damaging their properties to make them unuseable, there is no law to prevent them simply demolishing empty properties, provided they are not listed.

Why pay 拢400,000 in tax when you can hire a demolition contractor for 拢150,000

Colin Mcloughlin, General Demolition

Colin McLoughlin, chairman of General Demolition, said: 鈥淲e鈥檝e got more work than we can do at the moment. Why would you want to pay, say, 拢400,000 in tax on empty buildings when you can hire a demolition contractor for 拢150,000?鈥�

One developer source said: 鈥淒emolition is about the only growth sector in the market at the minute. It鈥檚 straight cause and effect.鈥�  

A spokesperson for Brixton said: 鈥淭he revenue we could get for renting out a building is offset by the liability we鈥檇 pay if part of it was empty, which falls in favour of demolition.鈥�

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