The Chancellor’s Budget report will have detrimental effects on the commercial property sector, says the Royal Institution of Chartered Surveyors.

RICS highlights the Chancellor’s plans of phasing out the Industrial Building Allowance as well as the restriction of rate relief on vacant industrial property from April 2008.

Brian Berry, RICS head of UK public policy, said: “The restriction of rate relief on vacant industrial property from April 2008 could lead to owners deliberately damaging buildings to remove them from the ratings list and exempt them from the empty rate. Hitting those with empty property in the pocket is not an effective way to encourage redevelopment of vacant sites.

“We could see a drop in share prices for companies with holdings in industrial property and, as the IBA covers hotels, the delivery of the Olympics could be in jeopardy.”