Paying out large sums of money on vacant commercial property is a blow to businesses. An empty property does not produce any income, which is why landlords want to understand how to reduce empty rates liability.
What properties are exempt from business rates
In England, there are several properties that are fully exempt from paying business rates. These properties will fall within several groups.
- Church buildings and halls used for religious purposes.
- Buildings that are used to support the welfare of the disabled.
- Structures on land used for agriculture or fish farms.
- Empty listed properties.
- Empty properties with ownership under registered charitable organisation will be exempt if they can prove they will be used for charity once reoccupied.
- Community amateur sports club properties will be exempt if they are to be used for sports in the future.
What to do if your property is not exempt
Landlords must pay the full business rates after the tenant leaves the property; three months for non-industrial and half a year for industrial. Finding tenants within this short amount of time is challenging, but there are ways in which you can reduce your empty rates liability.
Find tenants on a short-term basis
Finding long-term tenants may be hard but if you can find tenants who will rent the property for a minimum of six weeks, there are ways in which to reset the time on the exemption period. Once the new tenants move in, they will have to pay the business rates. After their lease expires and the property becomes vacant again, the exemption period starts afresh. On the high street, short-term tenants might be in the form of pop-up shops, a shop that is deliberately temporary to achieve a particular goal. Pop-up retail is becoming more common across the UK, challenging the traditional bricks and mortar retail.
Another term for temporary activity in vacant or under-used shops or buildings is Meanwhile space. These spaces are let on a temporary basis at below-market rates to generate social value, which means economic, social, or environmental benefits for the local community.
A popular way of securing business rate relief when the property is vacant is by using property guardians. This is where people live in a property and keep it in good condition and under observation. This temporary residential usage means the owners pay council tax, which is considerable cheaper than business rates. This does not constitute a change of use because the arrangement is temporary. There are other benefits too including deterring squatters and preventing the property from falling into disrepair.
The owner occupies the property
If the landlord can prove a purpose, the owner of the property could take up temporary tenancy of their property. This must be for a minimum of six weeks and when the landlord leaves, the rates exemption period is renewed.
Give the space to a charity
Charitable occupation not only gives the landlord a reduction in empty rates liability, but it gives charities a wonderful opportunity to make a positive impact in their local communities. Organisations can use the buildings to assist with admin, training, office work or storage and can be instrumental in helping to make lasting change. There will be no rent, rates or utility bills but charities would have to install services such as WIFI at their own cost. The benefit to the landlord is a huge reduction in business rates because charitable organisations are only required to settle 20% of the total business rates. The landlord should reimburse them this 20%, possibly through contributions. This is favorable to the landlord who would otherwise have to pay 100% in business rates.
Want to find out more reasons?
Chat to our friendly team at The Lowe Group for more ways to understand how to reduce your empty rates liability on your vacant property. Our team are highly experienced in helping landlords get the most out of their properties while creating inspiring spaces and rejuvenating communities. If you are a landlord, contact us on +44 (0) 207 856 0171 or firstname.lastname@example.org