In an attempt to address the complexities surrounding empty property relief from business rates, changes have been made to legislation that apply from 1st April 2024. The amendments concern the eligibility criteria for seeking empty property relief.
Empty property relief from business rates can be claimed on commercial properties that are empty for three months (or six months for industrial and warehouse properties). Previously, if the property was then let for a period of six weeks or more, the business rates exemption would reset, meaning that when the letting came to an end, the landlord could claim empty rates relief for up to three/six months again.
From 1 April 2024, commercial properties must be occupied for thirteen weeks or more (rather than six weeks or more) to qualify for a further period of empty rates relief when the period of occupation ends. The change has been made in an attempt to stop the practice of 'box shifting' in which a landlord repeatedly lets out a property for periods of six weeks at a time (often to companies who use the property for temporary storage) in order to be able to claim further empty property relief once the six-week letting comes to an end.
The change of legislation is likely to dissuade landlords from letting to pop up shops, preferring to hold out for a tenant/licensee who will take the premises for at least thirteen weeks and a more regular income stream.
However, given that business rates were increased in April 2024, the change to eligibility criteria for claiming empty property relief presents a further issue for landlords as the rates increase will likely push more tenants into insolvency, resulting in more empty properties and reduced income for landlords who will face higher rates bills and for longer periods.
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