Empty Rates – Good News

This post was written by Katherine Campbell and Siobhan Hayes

There is some good news for those with rates liabilities for empty properties this week!

Since April 2008 rates relief on empty industrial space has been limited to six months. This, as we all know, has caused substantial hardship to landlords with empty properties and tenants with surplus space given the state of the letting market.

The Regulations allow the rates payer to claim a six months ‘empty property’ relief where the premises have been continuously and genuinely occupied for a period of at least six weeks. We do know of a number of ways in which rate payers try to minimise the impact of empty rates liability after the six months of rates relief has expired including by using the property for six weeks and then six months relief repeatedly (known as intermittent use).

The Estates Gazette has reported on a case heard this week in the High Court concerning such an empty rates "avoidance" scheme at a warehouse in Coventry. We understand that
Makro used a tiny fraction of its empty space at Rowleys Green in which to store documents. Between November 2009 and January 2010, 16 pallets of documents were stored in the 140,000 sq ft shed. Despite the limited extent of the storage, the court found that Makro were entitled to six months’ empty rates relief after the documents were removed, thereby effectively sanctioning the intermittent use scheme. It is clearly good news for now to know that such a limited occupation will be sufficient to trigger relief. We do not yet know if the case will be appealed.

This is a difficult issue for the Government who are under pressure to change the rules on empty properties and rates and we will watch for developments.