Changes to modernise empty property rates, which came into effect on 1 April 2008, aim to provide strong incentives to bring vacant premises back into use by removing reductions to the business rates bill.
The main change has amended the Local Government Finance Act 1988, to increase the empty property rate from 50% to 100% of the basic occupied business rate, after initial void periods have elapsed. For most properties, excluding industrial, the void period is three months. For industrial properties, the void period is six months. The change is intended to encourage owners to re-let, redevelop or sell empty non-domestic buildings.
Currently, if the rateable value of the unoccupied property is below £18,000 it will continue to be exempt from business rates until 31 March 2011, after the initial three or six month exemption. With effect from 1st April 2011 this threshold is being reduced to £2,600. Empty properties with a rateable value over £2,600 will attract a full charge after the initial three or six month exemption.
Properties owned by charities and community amateur sports clubs are not liable to empty property rates if the property's next use is likely to be wholly or mainly for charitable purposes or for the purposes of a sports club.
Can I get my property taken out of the rating list altogether?
If your property is not capable of beneficial occupation - for instance, if it is in poor condition and cannot be economically repaired - your valuation officer may judge that it should be taken out of the rating list altogether. However, please be aware that if the state of your property is damaged for the purposes of avoiding rates, under new anti-avoidance legislation introduced by the Government your valuation officer will be required to disregard the change in the property’s state when assessing its rateable value. So 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.
How will my rates liability be affected if my property is only partly occupied?
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. From 1 April 2008, as a consequence of the reforms to empty property relief, the empty part will receive a complete exemption from rates for the first three months it is empty (or, if it is an industrial property, for the first six months). After the initial rate-free period expires, in most cases the apportionment will cease to have effect and the occupied business rate will apply to the whole property. This will ensure that occupiers can benefit from any occupied business rate reliefs to which they are eligible - such as small business rate relief - on the whole of the property, not just the occupied part. However, if the property would qualify for the new zero rate or for an exemption from rates when empty, the apportionment will continue to have effect and the owner will not be liable for rates on the empty part.
Can I appeal against the change in my rates liability?
The changes in rates liability arising from the reforms to empty property relief are not in themselves grounds for appeal. However, 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 making a 'proposal' against it to your local valuation office. Your rights of appeal are not affected by the reforms to empty property relief and you can contact the local valuation office for further information about the arrangements for making proposals. Their details are as follows:
Rates South West
Valuation Office Agency
Temple Quay House
2 The Square
03000 501 501
What properties are exempt from empty rates?
Under the provisions of the Local Government Finance Act 1988 the rating of unoccupied property is mandatory and the full charge is now due from 1st April 2008.
A property becomes liable to unoccupied rates when on any day all of the conditions set out below are fulfilled.
- The whole of the property is unoccupied.
- The person who is liable to pay the unoccupied property rates is entitled to possession of the whole property.
- The property is shown in the local rating list in force for the year.
- Regulations do not provide for the property to be exempt from empty property rates.
Local Authorities do not have discretion to vary the percentage of unoccupied property rates chargeable or to exclude classes of hereditament from liability.
There are however, some classes of non-domestic property which are exempt from liability to pay unoccupied property rates. These are where the following conditions apply:-
A) Property unoccupied for a period not exceeding three months or six months if an industrial or warehouse property
A property is exempt from unoccupied rates on a day if, on that day, it has not been continuously unoccupied for a period of three months or six months in the case of an industrial or warehouse property. For the purpose only of determining whether a property has been continuously unoccupied, any period of occupation of less than six weeks is disregarded. A period of occupation of less than six weeks which extends beyond or takes place after the three or six month period does not trigger a new three-month period of exemption. The occupier of the property is liable for full occupied rates during such period of occupation.
B) Occupation prohibited by law
A property is exempt on any day that its owner is prohibited by law from occupying it or allowing it to be occupied.
C) Kept vacant by reason of action taken by the Crown or any local or public authority
A property is exempt on any day that it is kept vacant due to action taken by the Crown or any local or public authority to prevent occupation or acquire the property.
D) Listed buildings
A property is exempt on any day that it is the subject of a building preservation notice as defined by Section 58 of the Town and Country Planning Act 1971 or is included in a list compiled under Section 54 of that Act.
E) Scheduled ancient monuments
A property is exempt on any day that it is in the Schedule of Monuments compiled under Section 1 of the Ancient Monument and Archaeological Areas Act 1979.
F) Small properties
Properties with a rateable value of less than £2,600 (with effect from 1 April 2011).
G) Possession only as a personal representative, liquidator etc.
A property is exempt if the person entitled to possession of it holds it only as a personal representative of a deceased person, a liquidator or trustee under a deed of arrangement or where the owner is the subject of bankruptcy proceedings.
Last updated: 11 November 2013