Empty business units have cost taxpayers in South West Hertfordshire more than £30 million in lost business rates over the last five years, new figures have revealed.

Since 2014 the area has lost on average £1.6 million per year due to tax relief on empty units – and councils in South West Herts have lost out on millions through potential business rates income.

The aim of the tax relief is to allow for property investment and give landlords time to find a new occupant.

But it means that under law, empty business premises cannot be taxed under the business rates system for at least three months.

And the figures show that in total South West Hertfordshire lost out on £32,722,075 in the past five years due to tax relief on empty properties.

This was around 2.77 per cent on average of the potential total income to councils in the area, according to the BBC shared data unit.

Watford Borough Council suffered the worst losses in the area – the town in total lost out on £13.7 million between 2014-19, on average 3.94 per cent over five years of the potential total income to the council.

Mayor of Watford Peter Taylor said the Lib Dems want to scrap business rates and replace them with a "commerical landowner levy".

"That would shift the tax burden from tenants to landlords and help thousands of businesses across the country,” Mr Taylor said.

He added: "Watford has a very high level of employment sites per square mile and these can be empty for short periods of time for various reasons. Unlike many towns, we have a thriving town centre.

"We are attracting new businesses to our town and are seeing existing businesses grow."

Dacorum Council lost out on more than £10 million over the past five years, losing on average £2 million per year and around 2.98 percent on average of potential total income.

The council said it expects there to be several properties empty at any particular point in time and the data showed that this had been consistent since 2014.

A spokesperson said: “Our dedicated Enterprise and Investment Team is committed to attracting new investment into the borough and supporting established businesses.

“We provide free advice and support, networking opportunities, training and grant schemes to continue to make Dacorum a place to thrive.”

Meanwhile Hertsmere Borough Council lost £4.5 million due to tax relief between 2014-19, losing on average £918,151 per year.

But the council did not comment on the figures since they were in a “period of purdah”.

Although the council said its policy on rates relief for empty business premises is in line with national legislation.

Three Rivers District Council lost out on the least amount of money in South West Herts, losing £4 million over five years and on average £810,952 each year.

The district council said towns in Three Rivers have some of the lowest rates of retail vacancies in South West Herts, and general business vacancies in the district are very low compared to the rest of the country.

But it added there were several reasons why a property may be empty, including that the lease has been surrendered without notice and the owners may be emptying the property in order to then convert to residential use.

A spokesperson added: “The scheme for business rates (NNDR) relief on empty properties is a statutory scheme. Three Rivers therefore has no choice but to grant the relief, nor any influence on the amount of relief given.

“The statutory scheme allows for full relief for the first three months that a property is empty.”

Across England and Wales, the cost to the taxpayer of empty business units has now risen to more than £1bn a year.

And there have been urgent calls for a reform of the system, including addressing business rates avoidance and the impact of reliefs.

Dominic Curran, property advisor at the British Retail Consortium, said: “It has been a challenging year for many retailers, as many shops struggle to adapt to rising cost pressures and changing consumer habits.

“High among the concerns for retail firms is business rates – a tax which disproportionately harms retailers, driving shop closures and job losses, leaving empty shopfronts and harming local communities.

“It is essential that the Government makes good on its pledge to reform this broken tax system.”

HM Treasury said the local government finance system has been designed so that business rates income is redistributed across the country according to the needs of local areas.

A spokesperson added: “Empty property relief strikes a balance between incentivising property owners to put vacant properties to use, while not penalising those who lose a tenant at short notice.

“We will announce further details of the business rates review in due course.”