With effect from 1 April 2008 the rules on ratesliability for unoccupied premises changed. Unoccupied industrial and warehouse premises are exempt from liability for only six months from the date they became unoccupied, after which they will be charged at the full rate; whereas offices and retail property will be charged at the full rate following a three month exemption period.
There are ways to avoid paying rates on empty property, however, it is important to weigh up the advantages and disadvantages as many of the possible solutions also have a downside.
If a property is occupied for a period of six weeks,the concessionary period referred to above will commence again once the property is vacated. Alternating between short lets and periods of exemption can continue indefinitely.
If a property is not capable of beneficial occupation - for instance, if 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. However, if the property is leasehold, care needs to be taken to avoid being faced with a claim by the landlord for breach of repairing obligations.
Unfinished buildings in the course of development are exempt. 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 monthsof completion.
Landlords of unoccupied property should consider allowing leases to run, rather than taking the premises back either by forfeiture or surrender. Tenants should avail themselves of any termination rights they may have under leases of premises that are unused, thus ending liabilities for all payments including rates. Developers could consider demolishing existing buildings immediately rather than waiting until planning consent has been granted for new premises.
It remains to be seen whether the new legislation will be successful in encouraging the use of empty premises as the government intended. However,it is clear that in the short term the changes imposea considerable additional financial burden on businesses during a downturn in the economy, and where possible, steps should be taken to minimisethe impact of these changes.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.