The property industry is calling on the Government to enact emergency legislation that would temporarily bring back business rate relief on empty commercial property.

Dozens of buildings are being torn down each month to avoid paying full business rates on empty retail and office property, according to the British Property Federation, the industry body.

New figures from NB Real Estate, the commercial property agency, show that the number of vacant commercial properties has risen by 21 per cent since the abolition of business tax relief on empty properties was announced in March 2007.

Over 13 per cent of commercial property buildings in the UK are empty, up from 10 per cent a year ago, according to NB.

A spokesman for the BPF said: “When the legislation was first suggested there was a boom time in property. With the market the way it is at the moment, it’s much more of a burden on property companies and will discourage them from development, which could stop regeneration, the opposite of what the Government wants.”

The tax bills of property companies have shot up since the legislation came into force in April. Segro, the industrial estate specialist, said in March that it anticipated an £8 million rise in its tax bill.

A spokesman for Segro said: “Empty rates would never have been a good idea but during a cyclical downturn they are by any measure a completely counterproductive idea. Like many other property companies we are now demolishing more buildings. Empty rates make it too costly to continue to provide cheaper older property — it simply makes more economic sense to demolish these buildings altogether, thereby actually reducing the amount of lower cost space available to businesses — the reverse of what was supposedly intended.”

The impact could also be high for small companies, such as Evans Easyspace, which specialises in flexible offices for small businesses. Tom Stokes, managing director of Evans Easyspace, told The Times that the company would pay an additional £500,000 against its £10 million annual profit.

John Healey, the Minister for Local Government, told Parliament in March that the reforms enabled the Government to change the rate relief, if future circumstances require it, to a limit of 50 per cent.

The Treasury was unavailable for comment.

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