Posted: Tuesday, 5 April 2011 @ 17:49
Over the past few weeks I have received many enquiries from property owners looking to minimise the amount of business rates they pay whilst their property stands empty. This is a particularly important issue since the threshold for claiming Empty Property Rates Relief was reduced from £18,000 to £2,600 this month.
Property owners therefore need to review tactics to minimise liability for business rates by adopting new initiatives.
The Meanwhile Scheme was introduced by the government to help revitalise town centres and increase the temporary occupation of vacant units for non-commercial purposes rather than having property sit empty whilst a landlord finds a permanent tenant.
The “Meanwhile Lease” is one of the options available to landlords where the property is occupied on a short term flexible basis by a charity or other non-profit organisation whilst the landlord continues to market the shop or other premises until a suitable commercial tenant is secured. At that point the landlord would be able to exercise a break clause to regain vacant possession. The costs advantages to the property owner are obvious as the “Meanwhile Occupier” is likely to be exempt from paying business rates.
Some of the uses for which “Meanwhile Leases” can be put are art/culture based exhibitions, learning facilities, workshops and other community based projects.
Cousins Business Law is able to assist with the implementation of a Meanwhile Lease at a fixed fee which both protects the landlord’s investment and ensures the Meanwhile Scheme meets its objectives.
In basic terms the temporary occupier would be liable for payment of business rates but would make an application to minimise the amount payable. This structure of the arrangement therefore benefits both parties. From a landlord’s point of view, the Meanwhile Scheme is a useful way to avoid or at least minimise business rates for empty property whilst the non-commercial tenant is able to occupy property rent free for a specific project on flexible terms.
Outside of the Meanwhile Scheme it is possible for the principles to apply equally for a lease to a commercial tenant where both parties see it as a short term letting (e.g. 6 months) and require flexibility. The added advantage for the property owner is that so long as the unit is occupied for at least 6 weeks no rates would be payable once the property becomes empty again for 6 months (industrial/warehouse) or 3 months (all other property). Once again we can draft a suitable lease to be put in place at a fixed fee.
See also my blogs on Empty Property Business Rates 2011 and Small Business Rate Relief 2011
Steve Petty
Commercial Property Solicitor
01926 629 005
For free advice on this topic please call us on 0845 003 5639.
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