Owning a commercial property that stands empty can be expensive. Even when a building isn’t generating income, the owner may still be liable for business rates. However, there are important exemptions and reliefs available depending on the property type, its condition and how long it has been vacant.
This article explains when business rates apply to empty commercial properties, what exemptions you may be entitled to and how to manage your liabilities under UK law.
What are business rates?
Business rates are a tax on non-domestic properties used for business purposes. They are charged by local councils and are based on the property’s rateable value, which is determined by the Valuation Office Agency (VOA).
These rates apply to a wide range of commercial buildings including offices, shops, warehouses, factories and pubs. The funds collected are used to help pay for local services such as roads, policing and waste collection.
When business rates apply to empty properties
If your commercial property becomes vacant, you usually still have to pay business rates after a short exemption period. The general rules are:
- For most properties, you do not pay business rates for the first three months after they become empty.
- Industrial premises such as warehouses or factories receive a six-month exemption.
- After the exemption period ends, full business rates are payable again, even if the property remains unoccupied.
These rules are designed to encourage property owners to bring buildings back into use quickly rather than leaving them vacant long-term.
Exemptions and reliefs for empty properties
In some circumstances, property owners may qualify for extended relief or full exemption. Common examples include:
- Listed buildings: These are exempt from business rates while they remain empty.
- Small properties: If the property’s rateable value is under £2,900, no rates are payable while vacant.
- Properties owned by charities: If the property’s next use is likely to be charitable, it may qualify for full exemption.
- Properties owned by companies in administration or liquidation: These are usually exempt while the company is insolvent.
- Properties that cannot be occupied: If the building is in poor condition or undergoing major structural repairs, owners can apply for a temporary exemption.
Relief is not automatic. You must apply to your local council and provide supporting evidence, such as photographs or inspection reports.
What counts as unoccupied?
A property is considered unoccupied if no one is using it for business purposes. Even partial or temporary use can disqualify you from empty property relief. For example, if a company stores equipment or furniture in the premises, the local authority may class the building as occupied and reinstate business rates.
The definition of occupancy can vary slightly between councils so it’s important to check with your local authority before making any assumptions.
Strategies to reduce business rate liabilities
Property owners can explore several strategies to manage or minimise their business rate costs when premises are empty:
- Let the property on a short-term or flexible lease to generate income.
- Use part of the building for storage or another qualifying business activity.
- Redevelop or refurbish the building to make it more attractive to tenants.
- Apply for hardship or discretionary relief if struggling to pay.
Working with a commercial property solicitor or rating adviser can help you understand your options and ensure any claims are made correctly.
Reoccupation and resetting the exemption period
If a property becomes reoccupied for at least six weeks and then falls empty again, the exemption period resets. This means you may be eligible for another three or six months of rate relief depending on the property type.
However, councils monitor this closely. Attempts to occupy a property for a short time purely to reset the exemption period may be challenged as rate avoidance.
Enforcement and penalties
Failing to pay business rates on an empty property can lead to serious consequences, including:
- Liability orders and court enforcement
- Bailiff action to recover unpaid rates
- Additional costs, fees and interest charges
- Damage to credit and business reputation
It is always better to engage with your local council early and seek legal advice if you are unable to pay.
How solicitors can help
Understanding business rates law and managing exemptions can be complex, especially for owners of multiple properties or those facing financial challenges. Solicitors experienced in commercial property law can:
- Review rateable values and appeal assessments where appropriate
- Advise on eligibility for relief or exemptions
- Communicate with local councils and handle disputes
- Provide guidance if enforcement action has started
Professional advice can make a significant difference in reducing your overall liability and ensuring compliance.
Legal advice for commercial landlords
Owning an empty property can be financially draining but knowing your rights and options helps you stay in control. Whether you’re seeking relief, challenging a rateable value or negotiating with your local authority, expert support ensures the best possible outcome.
Please note that this article is solely for informational purposes. It’s not a substitute for legal advice. We encourage readers to contact Osbourne Pinner for case-specific guidance.
For clear legal advice on business rates, empty property exemptions and commercial landlord rights, contact our commercial property specialists. We can help you navigate complex business rate regulations and protect your commercial interests.
If you’d like a free 30-minute consultation, call 0203 983 5080, email [email protected] or use the form below. We have offices in Harrow, Canary Wharf, Piccadilly Circus and Manchester or you can speak to us on a video call.
