David Prosser's Outlook: Property boom turns to dust – literally

This newspaper warned six months ago that businesses were planning a dramatic response to new taxes on empty buildings. Many commercial property companies planned to demolish their unlet buildings, The Independent reported, in order to avoid the higher business rates announced in last year's Budget.

Nonsense, said the Government, and anyone who dares do such a thing will face the full wrath of the Treasury. Well, two weeks ago, we reported on the first such demolitions, and there was silence from ministers who had previously threatened defiant property company bosses with vengeance.

Now, one of the Government's own regeneration experts is sounding the same alert. John Nicholls said yesterday that higher taxes on empty buildings were proving to be an increasingly serious obstacle to regeneration.

The Treasury can ill afford to do without the £950m that extra business rates are projected to generate this year. But unless ministers recognise that the commercial property landscape has changed dramatically since last year's Budget – when demand was high – so too will the landscape of many towns and cities. And not for the better.