Relief for Landlords of Empty Commercial Properties

Recent Ruling Provides Relief for Landlords of Empty Commercial Properties 

 Owners and occupiers of empty industrial properties can claim six months relief from business rates.  After six months they are liable to pay full business rates although if their property is occupied again for at least six weeks they can claim a further six months of relief.  Dan Smith, Managing Director of M4 Property Consultants reports about how in a recent landmark High Court ruling Makro Wholsesaling had a decision made by the Magistrates Court overturned in relation to their endeavours to maximise the amount of relief from business rates that they could claim and the benefits of empty rates avoidance schemes for commercial properties.
 
Makro had stored a proportion of archived files in their warehouse which the local authority had argued was insufficient to amount to occupation that would trigger a further six months of business rates relief.  The Magistrates agreed and concluded that the degree of occupation by Makro was “de minimis” and did not amount to occupation.  Of their 140,000 square foot warehouse in Coventry, Makro had used just 0.2% of the floorspace for storage.   

Judge Jarman QC took a different view and ruled that Makro’s temporary use of the warehouse to store 16 pallets of documents between November 2009 and January 2010 was sufficient to trigger a further six month period of exemption from empty rates once the files were removed. 

The High Court’s decision will be a blow for the Government which is handing out an estimated £1bn in empty rates relief each year as a result of avoidance tactics but landlords will be pleased that their mitigation tactics have been proved to be lawful. 

Commenting on the decision, Dan said, “This judgement will no doubt be welcomed by landlords and ratepayers suffering from the high costs of empty property rates.  It also gives further impetus and support to the use of empty rates avoidance scheme. We have been successfully advising clients on empty rates avoidance strategies for many years.  This new High Court judgement may substantially assist this process in the future.”