Plans to demolish six empty buildings in the Jewellery Quarter before an agreement has been reached about redeveloping the site would set a bad precedent, Birmingham planners have warned.

The city council fears it could result in land remaining unused and fenced-off by hoardings for years and so insists that developers sign contracts committing to a timescale for replacement before demolition is permitted in conservation areas.

Developer Chord Deeley wants to knock down a row of early 20th century factory buildings before signing a legal agreement to go ahead with construction of 695 apartments, two hotels and offices on the land bounded by Carver Street, Pope Street, Moreton Street and Camden Street.

City Head of Conservation, Christopher Hargreaves, said he feared other companies might be tempted to follow Chord Deeley’s lead, in particular British Land, owners of the NatWest Tower in the Colmore Row conservation area.

Although British Land has won planning permission for a £150 million 35-storey replacement scheme, formal contracts are yet to be signed.

Mr Hargreaves said the company could save money on empty buildings rates payments by demolishing the NatWest Tower as soon as possible.

But that might result in hoardings around an empty, highly visible, site in the city centre for a number of years, he warned.

Members of the council conservation and heritage panel were concerned about the scale of the proposed Jewellery Quarter demolition.

The development site in total is the same size as Brindleyplace, with the buildings earmarked for demolition covering about half the land.

Panel member Tim Bridges, representing the Victorian Society, said: “We are very concerned that this might set a precedent and we are also worried about appropriate treatment of the site if it were to remain vacant for a long time.”

Chord Deeley spokesman Geoff Shuttleworth urged the council to make an exception to its normal rules, adding that the buildings were subject to vandalism and inhabited by drug users, making it difficult for the company to move freely about the site.

Mr Shuttleworth added: “We have a major problem with people breaking in. The whole redevelopment of this site is pivotal to us having access to these buildings.”

Birmingham Planning Committee chairman Peter Douglas Osborn said there were already concerns that owners of “characterful buildings” which were not listed or in a conservation area were increasingly inclined to opt for demolition rather than pay empty property rates.

All empty commercial property has been liable for the full business rate after an initial rate-free period of three months, or six months for factories and warehouses, since April this year.

The Chancellor, Alistair Darling, bowed to pressure from the business community by announcing in his pre-Budget report last month that the Government will temporarily increase the threshold at which an empty property becomes liable for rates.

For 2009-2010 empty properties with a rateable value of less than £15,000 will be exempt from business rates, exempting an estimated 70 per cent of properties.