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Avoiding business rates on empty property

Friday August 22, 2008 at 4:14pm

Since 1 April this year owners of industrial and warehouse premises must pay full business rates on premises once they have been empty for six months. For owners of offices and retail property the liability comes in after the premises have been empty for only three months. Clearly this could be an enormous expense for a commercial landlord with a number of empty properties. Anecdotally, I have heard in my area that landlords are slashing rents on empty premises just to get them occupied to avoid the rates liability. This is obviously good news for anyone currently looking for commercial premises to rent.

There are a couple of other solutions though for landlords looking to avoid this liability.

One option is to let out the property on a casual basis for at least six weeks. If a property is occupied for a period of six weeks or more, then it can be empty again for the six month or three month period before the landlord is once again liable for the business rates. If a landlord were to let a property out for six weeks every three or six months (depending on the type of property) the liability could be deferred indefinitely.

If a property cannot be occupied because it is in poor condition and cannot be economically repaired, no rates will be payable. Similarly rates will not be payable where occupation is prohibited by law if, for instance, there are issues with asbestos or the property is deemed to be a dangerous structure. A landlord of dilapidated premises may therefore have an incentive to allow them to deteriorate further to avoid the rates liability.

Unfinished buildings in the course of development are exempt from business rates. However, a local authority can serve a completion notice on the developer requiring completion of the development, if the authority considers that the building is within three months of completion. If you are a landlord halfway through development of commercial premises and you do not have a tenant you may be well advised to halt work until a tenant is found. This may give rise to the situation commonly seen on the continent where unfinished properties are commonplace to avoid tax liabilities.

If you require further advice on legitimate strategies to avoid paying business rates on empty property then contact commercial property lawyer, Steven Petty, on 01926 629005.

**Check the latest position for 2011/2012 here**

Steve Petty, Commercial Property Lawyer

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This blog is not intended to constitute legal advice, nor is it intended to be a complete and authoritative statement of the law, and what we say might be out of date by the time you read it. You should always seek legal advice to confirm whether or how any information in this article applies to your particular situation. We offer a free telephone consultation to discuss your particular circumstances.

11 Comments

David Flood | May 2, 2009 @ 4:14pm
Steve Good article and good advice. Would you show support for my empty rates petition at http://petitions.number10.gov.uk/extendEPRvoid/ kind regards David Flood...
Michael Packer | September 28, 2009 @ 3:55pm
With the threshold for payment of busness rates raised to empty property valued over £15,000. Would a company sub-letting small units with-in a property, each rated separately, have to pay rates on unoccupied units below the threshold? Any help would be appreciated....
Roger Baresel | October 4, 2010 @ 10:29pm
The article on avoiding business rates on empty properties is very useful but is 2 years old. Have things changed since then ? Thank RB London SW7...
online bingo | February 23, 2011 @ 5:10am
Property tax is a levy issued by a government on a person's real or personal property. The property is assessed to give it a value, and then that value is taxed. The amount of property tax owed is determined by multiplying the fair market value of the property by the current tax rate....
Roger Jones | March 9, 2011 @ 8:12pm
Does health and safety issues such as no toilets or accessable fire escapes avoid liability on small commercial property (windows broken etc)...
Steve Petty | March 21, 2011 @ 4:12pm
Hi Roger The premises must be incapable of 'rateable occupation'. A surveyor will be able to assist in advising what state the property must be in to fall below that threshold. Bear in mind that the local authority can serve notice on you requiring you to bring the property up to a 'rateable occupation' standard if the work required to bring it up to that standard can be completed within a three month period....
Employment Law Manchester | April 8, 2011 @ 3:07pm
I find it crazy that rates should be applied to maintain an empty building. The whole point of rates is that you are paying for a service (eg refuse collection) Why should you pay for a service that youre not going to receive...
Roger Jones | August 5, 2011 @ 10:50pm
The rates on empty commercial property are unfair of course. In the current market, business is in retraction, therefore the legality is argued that this legislation is to force landlords to let.Its effect is to deprive you of the right to choose, even iff it could be let! its a subtle wealth tax and it reduces funding for business activity, ie the tax is false because there is no income(assumed). WHO CARES? NO ONE Only by organisation and forming a group can we defeat this illegal tax...
john getty | November 15, 2011 @ 10:23pm
We are a growing company trapped in old premises by this unfair tax. We cannot afford to move into newer premises because we thought that we were shrewd enough to buy our old ones. If we move and leave them empty and cannot find a tenant we will have to pay double rates because both new and old works will attract rates. We could have employed another thirty people but if the govt would rather have a quick buck in empty prop rates rather than helping us go forward, then why the hell should we bother trying....
Greg | December 13, 2011 @ 1:31am
We are a business that has three employees, we need a fourth, but to achieve that we need bigger premises. We could move to a four person office until we need five people then rent a five person office. My preferred idea was to buy an old dilapidated building and refurbish it, that could house 10 people (thinking to the future) but I'd need to pay for that space from day one which is over £6,000 a year. We don't make that in profit so basically business rates is preventing us from creating jobs. Well done UK policy makers no wonder this country is in such a mess....
Dennis Armstrong | August 6, 2013 @ 11:26am
I live above my pub which I have to close due poor trading conditions over the last four years. I have just been informed that I will have to pay the business rates after three months. I'm going to apply to de-licence the pub. But I have no idea how long this will take. This is my home as well as my business and access is available to my living quarters from down stairs. Even if I try to sell the pub it could take years given the trading climate. ...

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