Empty and partly occupied properties

Changes to the rates liability of empty and partly occupied properties to take effect from 1st April 2008

The Government has reformed empty property relief in order to provide a strong incentive to bring empty property back into use. It is hoped this will help to increase the supply of premises to let, and so reduce business rents and improve the competitiveness of the UK, as well as bringing forward brownfield sites for re-development and so reduce the need for new development on environmentally valuable greenfield land.

The reforms to empty property relief have consequential impacts for the rates liability of partly occupied properties that have been apportioned.

So what will this mean for my rates liability?

As of 1 April 2008, most property that has been empty for more than three months - or, in the case of industrial property (e.g. factories and warehouses), for more than six months - will no longer receive relief from rates.

After the initial three or six month rate-free period expires, empty property will be liable for 100% of the basic occupied business rate. The three or six month initial exemption period will commence from the date the property was vacated. For most empty properties this means the 100% charge will begin on 1 April 2008.

Certain properties will be exempt from Empty Property rates (EPR). These are;

• vacant listed buildings;
• vacant small properties with a rateable value of less than £2,000;
• vacant properties of companies in administration or liquidation;
• vacant properties owned, and last occupied, by a charity where the next user of the property is likely to be charity;
• vacant properties where occupation is prohibited by law.

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. Information is available on the Valuation Office Agency website (external link).

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, EPR 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 3 months it is empty (or, if it is an industrial property, for the first 6 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 this authority or the local valuation office for further information about the arrangements for making proposals.