The government has reformed empty property relief in order to provide a strong incentive to bring empty property back into use. This will help to increase the supply of premises to let, and so reduce business rents and improve the competitiveness of the UK, as well as bringing forward brownfield sites for re-development and so reduce the need for new development on environmentally valuable greenfield land. The reforms to empty property relief have consequential impacts for the rates liability of partly occupied properties that have been apportioned.
What this means for your rates liability
Since of 1 April 2008, most property that has been empty for more than 3 months (6 months for an industrial property) will no longer receive relief from rates. After the initial 3 month (or 6 months) rate-free period expires, empty property will be liable for 100% of the basic occupied business rate, unless it:
- qualifies for the zero rate provided by the Rating (Empty Properties) Act 2007. Since 1 April 2008, the rate liability of empty property held by a charity and appearing likely to be next used for charitable purposes, or held by a community amateur sports club (CASC) and appearing likely to be next used for the purposes of the CASC, was reduced from 10% of the basic occupied rate to zero
- qualifies for an exemption from rates under the NNDR (Unoccupied Property) Regulations. For example, if the property is a listed building or has a rateable value of less than £2,900 then, when empty, they will continue to receive relief from rates until they are reoccupied.
Empty rates exemption for businesses below a certain rateable value
Historically, the threshold rateable value from this exemption has changes as follows:
- between 1 April 2009 and 31 March 2010 vacant commercial properties with a rateable value of less than £15,000 were exempt from empty business rates
- between 1 April 2010 and 31 March 2011 vacant commercial properties with a rateable value of less than £18,000 were exempt from empty business rates
- between 1 April 2011 and 31 March 2017 empty commercial properties with a rateable value of less than £2,600 were exempt from business rates
- since 1 April 2017 empty commercial properties with a rateable value of less than £2,900 are exempt from empty business rates
Taking a property out of the rating list
If your property is not capable of beneficial occupation - for instance, if it is in poor condition and cannot be economically repaired - the valuation office may decided to remove it from the rating list.
However, if the state of your property is damaged for the purposes of avoiding rates, under anti-avoidance legislation the valuation office is required to disregard the change in the property's state when assessing its 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.
Partly occupied property
If a property is only partly occupied, the billing authority has discretion to request that the valuation officer apportions the property's rateable value between its occupied and unoccupied parts.
At present, broadly speaking, the empty property rate applies to the empty part of an apportioned building and the occupied business rate applies to the occupied part.
Since 1 April 2008, the commercial premises may receive a complete exemption from rates for the first 3 months it is empty. After the initial rate-free period expires, in most cases, the apportionment will cease to have effect and the occupied business rate will then apply to the whole property. This ensures occupiers can benefit from any occupied business rate relief - such as small business rate relief - for the whole of the property and not just for the occupied part. It also ensures such properties would qualify for the zero rate or for an exemption from rates when empty, with the apportionment continuing to take effect, and the owner not being charged for rates on the empty part.
Proposals against the change in rates liability
The changes in rate liability arising from the reforms to empty property relief are not in themselves grounds for appeal.
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 raising a check or challenge with the Valuation Office.