Who pays empty rates?
In accordance with the provisions of section 45 of the Local Government Finance Act 1988 as amended by the Non Domestic Rating (Unoccupied Property)(England) Regulations 2008, the owner (i.e. the person entitled to possession) of an unoccupied non-domestic property is liable to pay 100% of the basic occupied business rate. Rates will not be payable for the first three months that a property is empty. This period will be extended to six months for qualifying industrial properties.
Qualifying industrial hereditament
The regulations define a ‘qualifying industrial hereditament’ as any hereditament other than a retail hereditament in relation to which all buildings comprised in the hereditament are:
(a) constructed or adapted for use in the course of a trade or business; and
(b) constructed or adapted for use for one or more purposes ancillary thereto:
(i) the manufacture, repair, or adaptation of goods or materials, or the subjection of goods or materials to any process;
(ii) storage (including the storage or handling of goods in the course of their distribution);
(iii) the working or processing of materials;
(iv) the generation of electricity;
and ‘retail hereditament’ means any hereditament where any building or part of a building comprised the hereditament is constructed or adapted for the purpose of the retail provision of:
(a) goods, or
(b) services, other than storage for distribution services, on or from the hereditament.
How much is the empty rate?
100% of the basic occupied business rates will be payable on all relevant non domestic hereditaments unless they fall within one of the categories defined within paragraph 4 of the Non Domestic Rating (Unoccupied Property)(England) Regulations 2008 (as amended by The Non-Domestic Rating (Unoccupied Property) (England) Regulations 2009). These categories are shown below.
Any hereditament which falls within one of the following categories will be exempt from empty rates
- whose owner is prohibited by law from occupying it or allowing it to be occupied
- which is kept vacant by reason of action taken by or on behalf of the Crown or any local or public authority with a view to prohibiting the occupation of the property or to acquiring it;
- which is the subject of a building preservation notice within the meaning of the Planning (Listed Buildings & Conservation Areas) Act 1990 or is included in a list complied under section 1 of that Act;
- which is included in the Schedule of monuments compiled under Section 1 of the Ancient Monuments and Archaeological Areas Act 1979;
- whose rateable value is less than £2,900
- whose owner is entitled to possession only in his capacity as the personal representative of a deceased person;
- where, in respect of the owner’s estate, there subsists a bankruptcy order within the meaning of 381(2) of the Insolvency Act 1986;
- whose owner is entitled to possession of the hereditament in his capacity as trustee under a deed of arrangement to which the Deeds of Arrangement Act 1914 applies;
- whose owner is a company which is subject to a winding-up order made under the Insolvency Act 1986 or which is being wound up voluntary under that Act;
- whose owner is a company in administration within the meaning of paragraph 1 of schedule B1 to the Insolvency Act 1986 or is subject to an administration order made under the former administration provisions within the meaning of article 3 of the Enterprise Act 2002 (Commencement No.4 and Transitional Provisions and Savings) Order 2003
- whose owner is entitled to possession of the hereditament in his capacity as liquidator by virtue of an order made under Section 112 or Section 145 of the Insolvency Act 1986.
A ‘relevant non domestic hereditament’ means any non domestic hereditament consisting of, or of part of, any building, together with any land ordinarily used or intended for use for the purposes of the building or part.
A hereditament which has been unoccupied and becomes occupied on any day shall be treated as having been continuously unoccupied, for the purposes of a three or six month exemption period, if it becomes unoccupied again on the expiration of a period of less than six weeks beginning with that day.
Empty properties held by a charity or Community Amateur Sports Club may qualify for the new zero rate provided by the Rating (Empty Properties) Act 2007.
Regulations regarding the rating of unoccupied properties was amended from 1 April 2008 .The information provided is based on those changes.