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Empty property business rates

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Empty property legislation

As part of the government's commitment to promote the efficient use of land and property, it has taken action to modernise empty property relief from non-domestic rates in an effort to bring vacant shops, offices, factories and warehouses back into use.

A 100% business rate charge now applies to most properties that have been empty for three months or more, or six months or more in the case of industrial and warehouse property, which took effect from 1 April 2008.

These reforms encourage owners to re-let, redevelop or sell unused property; improving access to premises and reducing rents for businesses, as well as reducing the need for development on greenfield land.

What will this mean for my rates liability?

From 1 April 2008, most property that has been empty for more than three months, or in the case of industrial property, for more than six months - will no longer receive relief from rates. This is unless the rateable value is below £18,000 for the period 1 April 2010 until 31 March 2011, £2,600 from 1 April 2011 to 1 April 2017 then £2,900 from 1 April 2017 onwards.

Empty new builds

The government has introduced as a temporary measure the power for local authorities to extend empty property rate relief for empty new builds. Empty new builds will be exempt from empty property rates for up to 18 months up to state aid limits between 1 October 2013 and 30 September 2016. The 18 month period includes the initial 3 or 6 month exemption. The relief continues beyond 31 October 2016 for those that become eligible before that date.

Are there any exemptions to this charge?

After the initial three or six month rate free period expires, empty property will be liable for 100% of the basic occupied business rate unless:

  • It is held by a charity and appears likely to be next used for charitable purposes
  • It is held by a community amateur sports club and appears to be next used for the purpose of the club
  • The rateable value of the property is less than £2,600 (with effect from 1 April 2010 to 1 April 2017)
  • The rateable value of the property is less than £2,900 (with effect from 1 April 2017)
  • The owner is prohibited by law from occupying the property
  • The owner is prohibited by action taken by the crown, or any other local or public authority from occupying the premises
  • If the property is the subject of a Building Preservation Notice within the meaning of the Planning (Listed Buildings and Conservation Areas) Act 1990, or is in a list under Section 1 of that Act.
  • The property is included in the schedule of monuments compiled under s.1 to the ancient monuments and archaeological areas act 1979
  • The owner is entitled to possession only in his capacity as the personal representative of a deceased person

If the following insolvency or debt administration situation exists:

  •  A bankruptcy order within parts 8 to 11 of the insolvency act 1986
  • The owner is a trustee under a deed of arrangement to which the deeds of arrangement act 1914 applies
  • The owner is a company subject to a winding up order made under the insolvency act 1986
  • The owner is entitled to possession of the property in his capacity as liquidator or administrator under s112 or s145 of the insolvency act 1986

Can I have my property removed from the rating list?

If your property is in poor condition and cannot be economically repaired, the valuation officer may judge that it should be taken out of the rating list altogether. If you are currently undertaking substantial refurbishment or reconstruction of the premises the Valuation Office may consider a temporary reduction in the rateable value of your property.

Decisions on such matters cannot be made by the council and you should contact the Valuation Office promptly and directly with queries of this nature

The valuation officer is an officer of HM Revenue and Customs and can be contacted on tel. 03000 501501 or through the Valuation Office Website.

However, you should be aware that empty rates will be payable if the property is shown on the Rating List irrespective of its condition.

New anti-avoidance legislation

If property is damaged in order to avoid paying rates the valuation office will be required to disregard the change in the property's state when assessing it's rateable value. For instance if the roof is removed from an empty property for the purpose of avoiding rates, it may be valued as if the roof had not been removed and rates will still be payable.

Can I appeal against the change in my rates liability?

The changes in rates liability arising from the reforms to empty property relief are not in themselves grounds for appeal. However, if you disagree with the rateable value that appears in the current rating list entry for your property, under the existing arrangements you may challenge it by making a 'proposal' against it to your local valuation office.

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