Landlords: ensure YOU benefit from any empty property rates relief
Due to the current state of the economic climate, some landlords are struggling to rent their properties and their difficulties can been intensified by the liability to pay business rates on empty properties.
When leasing business premises, the common position is to include a provision requiring the tenant to pay all rates or taxes which are imposed or payable in respect of the leased property during the lease. The inclusion of this requirement means that the tenant will bare such costs whilst they occupy the premises. The Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 (“the Regulations”) however provides that occupiers of business premises are entitled to 100% empty property rates relief if the property is empty and unoccupied. This relief is only available for a maximum period of three months. The relief available under the Regulations attaches to the property rather than the individual or company receiving the relief, therefore the Regulations do not allow a tenant to claim three months’ relief (if they cease to occupy the property prior to the end of the term) and then for the landlord to claim 3 months’ relief for the same property at the end of the lease term. As a result, when a lease expires, a landlord may only claim empty property rates relief for the remainder of the three month relief period (if any).
Due to the rates relief available to occupiers, a landlord may unexpectantly incur more overheads than anticipated during any re-letting period. For this reason, it is advisable for landlords to include an additional provision within the lease requiring the tenant to compensate the landlord for any empty property relief that the tenant receives. This way, if a tenant successfully claims empty property rates relief before the expiry of the lease, they will have to reimburse the landlord for any rates that the landlord subsequently has to pay at the end of the term.
If you would like to discuss the requirements in more detail, or would like any other advice in relation to business rates relief, please contact