Business vacants research to inform optimum market outcomes

Project status

Closed

Aim

To identify and evaluate reform options for vacant properties in the non-household market.

Project updates

The final report was published in May 2023.

It considers whether there is a problem in the market delivering the efficient level of false vacant properties and, if there is, what the options are for incentivising the market to deliver this.

The key conclusions are as follows:

  • Economic theory suggests in a competitive market, the market will deliver the ‘efficient level’ of false vacancies given it is in each market participant’s interest to reduce the extent of false vacant properties
  • Available evidence indicates the market might already be operating at the efficient level of activity for identifying false vacant properties. Therefore, the most effective way of reducing the level of false vacants would be to improve the ‘efficient’ level of activity (i.e. where the marginal cost of identifying a false vacancy is equal to the marginal benefit).

Based on the evaluation criteria used, the report finds that reform options that reduce marginal costs associated with identifying false vacancies are likely to be the most effective at achieving this. Of the reform options considered the most desirable include: increased cross-sector cooperation; pooling of wholesaler and retailer efforts; and sharing of bad debt risk between retailers and already billed customers.

Download report

The report was informed by a survey that took place in February 2023, which asked for trading parties' feedback on their experience in managing vacant properties.

 

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