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Protecting Empty Rates Relief For Landlords

View profile for Andrew Beattie
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A survey carried out by the Royal Institute of Chartered Surveyors of their members found that 92% of respondents viewed business rates as a barrier to town centre regeneration and 89% thought that business rates were restrictive to overall economic growth.  

Despite the concessions made in the last budget to raise the threshold for small business rates relief and increasing higher rates relief there is still the view within the business and property community that rates are too high and that more should be done by the government to reduce them.

When properties are empty it is the landlord who picks up the cost of the business rates and given that there will be no rental income from the property these costs can be crippling to commercial landlords.

Since the abolition of empty property business rates relief, most landlords benefit from only 3 months grace for non-industrial premises and 6 months for industrial premises before having to pay the full amount of business rates (the exceptions being listed buildings and properties occupied by sports clubs and charities).

The rate free period runs from the date a non-domestic property becomes vacant. The property will usually be considered vacant where it is unoccupied, unfurnished and not used for storage purposes.

It is therefore important that when a landlord is letting a property, he puts in place a well drafted lease which is drafted to make sure that the landlord gains the full benefit of empty rates relief. Such leases should provide that:-

  • The Tenant is responsible for all rates during the contractual term of the lease.
  • The Tenant cannot claim any rating relief without the consent of the Landlord.
  • The Tenant will indemnify the Landlord for any losses which result from the Tenant claiming any rating relief during the lease.

Should you require any assistance in the preparation of new leases or advice on existing leases then our Commercial Property team will be happy to discuss this with you.