Empty Property Rates – Real Estate and Construction

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As a result of recent court decisions, the options available to an owner of empty business premises to avoid liability for empty property rates have been reduced.

This is important because no rate is payable for the first three months in which the taxable premises in England are empty. After a minimum of 6 weeks of occupation, a new leave from empty rates up to three months applies again. This occupancy and vacuum pattern can be vital to a rate avoidance strategy. But whether or not there is a strategy, the three-month exemption is important for homeowners looking to control their spending.

Here is a new threat.

A number of London boroughs will no longer ignore furniture left in premises during occupancy tests. They will only consider vacant premises if:

  1. The property is completely devoid of any furniture, including tables, chairs and other equipment; Where
  2. The property only contains tables, chairs and other equipment but where these have been abandoned by an outgoing tenant.

This approach will extend to the treatment of equipped offices and only rooms with furniture removed will be considered vacant for these purposes. Premises not rented and unoccupied but where the operator’s furniture remains on site will be considered occupied. This change in approach will take effect on November 1, 2021.

This is a reversal of the existing practice.

However, it is likely that there will be a test case as to the legality of this change.

For now, the advice to landlords and asset managers should be that in order for your premises to qualify for the three month empty rate deductible, they should be kept vacant as described in the two points above.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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