Property Matters March 2008

Business rates on empty properties

The Rating (Empty Properties) Act 2007 comes into effect on 1 April 2008.  The result of this legislation is that rates will become payable on certain properties which were previously exempt and higher rates will be levied on properties which were already subject to the charge.

Empty rates are payable by the person or body entitled to occupation.  Therefore where empty premises are subject to a lease, the charge will fall on the tenant.  Where empty premises are not let, the charge will fall on the freeholder. 

The old regime
Under the old legislation, empty industrial premises were awarded 100% relief from rates.  Empty commercial premises were awarded 100% relief for an initial period of three months, after which rates became payable at 50%. 

There were some exemptions under the old regime, including:

• listed buildings;
• premises where occupation was unlawful (for instance if the property had an asbestos problem); and
• where the person entitled to occupation of the premises was the liquidator of an insolvent company. 

The new regime
From 1 April 2008, industrial premises will be awarded 100% relief for a period of six months after the premises become vacant.  After the six month period is over, rates will be payable at 100%.  Empty commercial premises will continue to be awarded 100% relief for three months.  However thereafter, rates will increase from 50% to 100%. 

It is important to note that, for both industrial and commercial premises, the relevant exemption period will run from the date the premises became vacant (rather than the date the legislation comes into effect. So if at 1 April 2008, industrial premises have been vacant for six months, or commercial premises have been vacant for three months, rates will become payable at 100% on that date. 

The exemptions outlined above will also continue to apply under the new regime.  In addition, new exemptions have been added to cover charities and community amateur sports clubs and where the body entitled to occupation of the premises is in administration.