Schemes to avoid empty rates
Many businesses are finding it difficult to survive in the
current economic climate and must restructure.
This has had a particular impact on the High Street, with
unprofitable shops closing down and disappearing.
Landlords are often left with an empty shop or office space with
no rental income, but are liable to pay business rates.
Under ‘The Non-Domestic Rating (Unoccupied Property) (England)
Regulations 2008’, a landlord only qualifies for a maximum of three
months empty rates relief where the property is empty continuously
for three months.
Change of ownership will not trigger a fresh period of empty
rates relief and any occupation for less than six weeks during this
period will not be a rateable occupation.
To minimise rates liability, landlords have been granting
Licences to Occupy any empty space for six weeks (minimum) to
businesses or charities free, particularly as the latter are exempt
In Makro Properties Ltd v Nuneaton and Bedworth Borough Council
(2012) the High Court considered a magistrates’ decision that
letting 0.2% of a warehouse for storage of 40 pallets for six
months was not a rateable occupation and did not trigger empty
rates relief as the only intention was to avoid liability.
A Rateable Occupation requires:
1 Actual occupational possession (which involves actual use of the
2 Occupation or possession that is exclusive
3 Occupation or possession which is of some value or benefit to the
occupier or possessor
4 Occupation or possession which has a sufficient quality of
Considering the above, the High Court held that despite the size
of the space and that the pallets could have been stored elsewhere,
the landlord had let the warehouse to store documents which must be
retained for legal reasons and were of practical benefit.
The case provides useful guidance on the types of short term
lettings of six weeks (minimum) which could trigger a fresh period
of empty rates relief even where the landlord’s intention is to
This could lead to savings to landlords who could benefit from
an additional five months empty rates relief per annum.
While the government may legislate to close this loophole, any
landlord should ensure that the four conditions are met to take
advantage of the same.
In particular, (1) clear evidence of an intention to occupy, (2)
the use of the space is not insignificant as without evidence of
intention a slight user may not be sufficient, and (3) there is
limited control of the unit by the landlord indicating a
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