Empty property tax affects Segro’s profits

Permalink: Empty property tax affects Segro’s profits
by Lin Freestone

Segro, the commercial property group formerly known as Slough Estates, has written off 11.5% from the value of its portfolio in the first half of the year to the end of June 2008.

The company has recorded a loss of £315.3m for the six months, against a £195m profit for the same period in 2008.

Segro has warned there will probably be further falls in property values across Europe. However, it has positive expectations about occupier demand for warehouses and industrial properties.

Ian Coull, the chief executive of Segro, has repeated his criticism of the Government’s removal of business rate relief on empty commercial property. He considers it to be a particularly stupid tax in the current economic circumstances. Segro expects to pay £8m in empty property tax for the full financial year. The tax has already cost the company £2m since April.

Segro considers it to be unfair as it penalises regeneration opportunities and it is then that buildings will get demolished more quickly. Signs of this are being seen already. Evidence is beginning to emerge that some landlords are choosing to demolish buildings since the ending of business rate relief on empty commercial property at the beginning of April.

Segro has undertaken 450,000 sq ft of demolitions in the first half of this year, compared with 400,000 sq ft for the whole of 2007.

The British Property Federation has been campaigning for the tax relief to be reapplied at 50%.