Business Rates on Empty Properties (for Commercial Landlords only)

Non-industrial property (for e.g., high street retail shop or a restaurant) landlords do not have to pay any business rates on vacant properties for the first 3 months.

They are given three months period to find a tenant or an occupier. After this most landlords may have to pay full business rates. This is a major concern for the commercial landlords if they cannot find a tenant within 3 months.

It’s a bitter pill for landlords to swallow as they have no source of income, the cost of maintenance and then what is often referred to as a “tax on failure” on top of this. And if the commercial property is in London, the business rates are excessive as compared to other parts of the UK. Therefore, landlords are looking for ways to avoid business rates on empty properties.

The COVID-19 pandemic has made this situation even tougher for many landlords; any economic downturn is hard enough to get through, but the subsequent lack of economic confidence has hit the commercial property market very hard.

However, there are certain types of commercial properties which may be eligible for extended relief or full exemption from business rates:

Extended Business Rates Relief  on Empty Commercial Properties:

• Industrial premises (for example warehouses) are exempt for a further 3 months, so in total of 6 months. After 6 months, they may have to pay full business rates.
• Listed buildings – until they’re reoccupied. Once occupied, the tenant will have to pay the business rates.
• Buildings with a rateable value under £2,900 – until they’re reoccupied
• Properties owned by charities – only if the property’s next use will be mostly for charitable purposes
• Community amateur sports clubs’ buildings – only if the next use will be mostly as a sports club

You must contact your Local Council to get the relief.

Exempted Commercial Properties from Business Rates:

• Agricultural land and buildings, including fish farms
• Properties used for training or welfare of disabled people
• Buildings and properties registered for public religious worship or church halls

If your property is in England, you can report that you think it should be exempt using the Valuation Office Agency service.

Commercial landlord can also explore business rates mitigation schemes to avoid business rates on empty properties.

The COVID-19 pandemic has meant that businesses in leisure, hospitality and retail have been hit hard, but the government did announce business rate holidays for these businesses for the financial year 2020/21. There was a caveat however in that these properties had to be occupied at the point of closure. Scotland has extended their scheme through 2021/22 and whilst the Welsh government briefly agreed to match the English scheme, they reneged slightly and it only applies to companies with a rateable value of £0.5 million or less.