Empty commercial property creates a significant and often underestimated cost for commercial landlords. The empty rate charge — formerly zero-rated until 2008 — was re-introduced by the Rating (Empty Properties) Act 2007 and now represents one of the largest holding costs for empty commercial premises. A £100,000 rateable value property will generate an empty rate liability of approximately £51,400 per year (at the 2024-25 standard multiplier of 51.4p in the pound) once the relief period expires — whether or not the landlord has a tenant, is carrying out works, or has any prospect of occupation. This guide explains the empty rate regime, the available statutory exemptions, the limited legitimate mitigation strategies, and the rating list appeal process.
The Empty Rate Relief Periods — Standard and Industrial Properties
The mandatory empty rate relief periods under the Local Government Finance Act 1988 (as amended by the Rating (Empty Properties) Act 2007): (a) Standard commercial properties (shops, offices, restaurants, and other non-industrial premises): 3 months of 100% empty rate relief from the date the property first becomes empty; after 3 months, the full business rates charge applies at the standard non-domestic multiplier; the 3-month period runs from the date of empty entry in the rating list — not from the date the landlord becomes aware of the vacancy; (b) Industrial and warehouse properties: properties that meet the definition of 'industrial hereditament' under the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 receive 6 months of 100% empty rate relief; an industrial hereditament is one used or constructed for use for the manufacture, repair, adaptation, or storage of goods or materials — a warehouse qualifies; a mixed-use property (industrial with ancillary office) is treated as industrial if the industrial use is the primary use; (c) Qualifying period reset: if a property that has been empty and then charged empty rates is re-occupied for a continuous period of 6 weeks or more, the empty rate clock resets on the next vacancy — the property receives a full new qualifying period of 3 or 6 months; this reset mechanism is one of the few legitimate tools available to commercial landlords to manage empty rate liability; (d) Chargeable person: the person liable to pay business rates on an empty property is the 'owner' of the property — generally the freeholder or any leaseholder holding a lease with more than 6 months to run (Reg.2 of the 2008 Regulations); where a superior landlord has granted a lease and the leaseholder is also out of occupation, the liability passes to the leaseholder as 'owner' for rating purposes; (e) Multiple periods of emptiness: where a property has a series of empty and occupied periods, each period of emptiness is assessed separately — the qualifying period applies to each separate period of emptiness.
- Standard commercial: 3 months 100% empty rate relief; full charge thereafter at the standard non-domestic multiplier
- Industrial/warehouse: 6 months 100% empty rate relief; full charge thereafter; industrial hereditament definition includes storage of goods or materials
- 6-week reoccupation reset: genuine reoccupation for 6 continuous weeks resets the empty rate clock on the next vacancy — full new qualifying period applies
- Chargeable person: the freeholder or leaseholder with 6+ months remaining on their lease is liable as 'owner' for empty rate purposes
- Relief is mandatory and automatic: no application required; the billing authority charges empty rates after the qualifying period expires
Statutory Exemptions from Empty Rates
The Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 provide a number of statutory exemptions from empty rates (in addition to the mandatory 3/6-month relief period): (a) Charitable exemption: a property owned by a charity is exempt from empty rates if the property's next use will be wholly or mainly for charitable purposes; the 'next use' test requires evidence that the charitable use is the probable next use — not a speculative future hope; (b) Community amateur sports clubs (CASCs): a property owned by a CASC (as defined under HMRC rules) is exempt from empty rates if the property will next be used for CASC purposes; (c) Listed buildings: a listed building (in England and Wales, listed under the Planning (Listed Buildings and Conservation Areas) Act 1990) is exempt from empty rates while it remains empty; this exemption is automatic and applies throughout the period of vacancy without a time limit; (d) Properties below the Small Business Rate Relief (SBRR) threshold: a property with a rateable value of £2,900 or less (England) is exempt from empty rates; this applies to small units and storage units at the lower end of the rateable value spectrum; (e) Prohibited occupation: a property where occupation is prohibited by law (e.g. by a court order; a closing order under the Housing Act 2004; a planning condition restricting use) is exempt from empty rates while the prohibition is in force; (f) Insolvency: a property owned by a company or individual in administration, liquidation, or receivership is exempt from empty rates while the insolvency practitioner is in office; the insolvency exemption was significantly restricted by the decisions in Makro Self Service Wholesalers v Nuneaton and Bedworth BC [2012] and subsequent rating authority challenges; the current practice is that a true insolvency (with the property forming part of the insolvent estate and the insolvency practitioner in control) is exempt, but artificial structures designed to benefit from the exemption without genuine insolvency will fail.
- Charitable exemption: property owned by a charity with 'next use' as a charitable purpose is exempt; requires credible evidence of charitable next use
- Listed building exemption: automatic and indefinite exemption while the property remains empty; no time limit; covers all listed buildings (Grade I, II*, II)
- Properties with RV below £2,900: exempt from empty rates throughout the period of vacancy
- Prohibited occupation: exemption where occupation is prohibited by law (court order; closing order; planning condition) while the prohibition is in force
- Insolvency exemption: property in a genuine insolvency (administration; liquidation; receivership) is exempt; artificial schemes to access the exemption will be challenged by billing authorities
Empty Rate Mitigation — Legitimate Strategies and HMRC Scrutiny
Landlords commonly explore mitigation strategies to reduce or eliminate empty rate liability. The law distinguishes between legitimate mitigation (which takes advantage of the statutory relief framework) and avoidance (which seeks to abuse the framework through artificial arrangements): (a) The 6-week occupation reset (legitimate): placing a genuine occupier in the property for 6 continuous weeks — even at minimal or nil rent — resets the empty rate qualifying period; the 'occupier' must genuinely be in rateable occupation (the Reeves and Thomas principle of beneficial occupation: actual occupation; exclusive occupation; valuable occupation; not too transient); charitable occupation (charity occupation for charitable purposes) can trigger the reset and also attracts charity rate relief during the occupation; (b) Property subdivision and refurbishment: subdividing an empty property into multiple self-contained units can reduce the rateable value of each unit, potentially bringing individual units below the SBRR exemption threshold; refurbishment works are not an exemption from empty rates — the empty rate charge continues during redevelopment; (c) The Makro stripping scheme (no longer reliable): in Makro Self Service Wholesalers Ltd v Nuneaton and Bedworth BC [2012], the Court of Appeal accepted that stripping a property of services (removing toilets; blocking windows) could render it a 'listed building' or otherwise unoccupiable — but subsequent legislative changes and judicial decisions have narrowed the availability of this strategy; billing authorities are alert to stripping schemes and will challenge them; (d) Artificial charity occupation: placing a charity in occupation for 6 weeks purely to reset the empty rate clock — without genuine charitable use — has been challenged by billing authorities; the charity must be in genuine beneficial occupation, using the property for its charitable purposes; (e) Rating list appeal to reduce rateable value: an appeal to the Valuation Office Agency (VOA) to have the rateable value reduced for the check, challenge, appeal (CCA) process can reduce the quantum of empty rates, but the rate charge continues during the appeal; appeals are considered on the basis of valuation evidence — abnormal market conditions; flooding; physical deterioration; (f) Rates mitigation companies: be cautious of marketed schemes that promise to eliminate empty rate liability through complex corporate structures; HMRC and billing authorities actively investigate and challenge schemes; penalties apply to promoters of tax avoidance schemes.
- 6-week occupation reset: placing a genuine occupier (including a charity) for 6 continuous weeks resets the qualifying period; occupation must be genuinely beneficial
- Property subdivision: reducing rateable value of individual units can bring some below the £2,900 SBRR exemption threshold
- Makro stripping schemes: no longer reliably available; billing authorities challenge aggressively; legislative changes have narrowed scope
- Artificial charity occupation: genuine beneficial occupation required; placing a charity in occupation purely to reset the clock will be challenged
- VOA rating list appeal: reduces the quantum of empty rates; useful where the rateable value is overstated; rates charge continues during the appeal
Rating List Appeals and the Check, Challenge, Appeal Process
A commercial landlord paying business rates (including empty rates) on a property with an inaccurate rateable value has the right to challenge the valuation through the check, challenge, appeal (CCA) process: (a) The CCA process (England): introduced in April 2017, the CCA process is a three-stage process; (i) Check: the ratepayer (or their agent) checks the property details on the Valuation Office Agency (VOA) rating list and corrects any factual inaccuracies; (ii) Challenge: if the ratepayer disagrees with the rateable value after a successful or unsuccessful check, they can submit a formal challenge; the challenge must set out the grounds for reduction and the proposed rateable value; (iii) Appeal: if the challenge is not resolved by negotiation with the VOA, the ratepayer can appeal to the Valuation Tribunal for England (VTE); (b) Grounds for appeal: the most common grounds for a rating appeal are: (i) the rateable value is too high relative to comparable properties in the rating list; (ii) a material change of circumstances (MCC) has occurred since the last revaluation — e.g. a significant reduction in market rents; flooding; a new road or development that has reduced values; (iii) an error in the property description or floor area; (c) Backdating of successful appeals: a successful rating appeal can be backdated to the effective date of the appeal (which may be the date of the original check or challenge); overpaid rates are refunded with interest; (d) The 2023 revaluation: the current rating list came into force on 1 April 2023, based on rental evidence from 1 April 2021 (the 'antecedent valuation date'); appeals against the 2023 list are being processed; (e) Transitional relief: the 2023 revaluation introduced transitional relief to phase in significant increases in rateable value; properties with large rateable value increases receive downward transitional relief limiting annual rate increases; properties with large decreases receive upward transitional relief (meaning they do not benefit immediately from the full reduction).
- CCA process: Check (factual accuracy) → Challenge (rateable value) → Appeal (Valuation Tribunal for England); three stages must be completed in order
- Grounds for appeal: RV too high relative to comparables; material change of circumstances; error in property description or floor area
- Backdating: successful appeals are backdated to the effective date; overpaid rates are refunded with interest
- 2023 revaluation: current rating list effective 1 April 2023; antecedent valuation date 1 April 2021; CCA appeals against 2023 list are being processed
- Transitional relief: phases in large RV increases; also phases in large RV decreases (upward transitional caps the immediate benefit of a successful appeal)
Frequently asked questions
How long does empty rate relief last on a commercial property?+
Standard commercial properties (shops, offices, and other non-industrial premises) receive 3 months of 100% empty rate relief from the date the property first becomes empty. Industrial and warehouse properties receive 6 months of 100% relief. After the relief period expires, the full business rates charge applies at the standard non-domestic multiplier — even if the property has no tenant and the landlord is actively seeking occupation.
Is a listed building exempt from empty rates?+
Yes. A listed building (listed under the Planning (Listed Buildings and Conservation Areas) Act 1990 in England and Wales) is exempt from empty rates throughout the period of vacancy — there is no time limit on this exemption. The exemption applies automatically to all listed buildings regardless of grade (Grade I, Grade II*, or Grade II) and continues as long as the building remains empty.
Can I reset the empty rates clock by placing someone in occupation?+
Yes, if the occupation is genuine. Placing a genuine occupier in the property for a continuous period of 6 weeks or more resets the empty rate qualifying period — the full 3 or 6-month relief period applies to the next vacancy. The occupier must be in genuine beneficial occupation: actual, exclusive, valuable, and not too transient. Artificial occupation arrangements (e.g. a charity placed in the property purely to reset the clock without genuine charitable use) are challenged by billing authorities.
What happens to empty rates when a property is in administration or liquidation?+
A property owned by a company in administration, liquidation, or receivership is exempt from empty rates while the insolvency practitioner is in office. This is a genuine statutory exemption under the Non-Domestic Rating (Unoccupied Property) Regulations 2008. However, artificial structures designed to access the insolvency exemption without genuine insolvency will be challenged. The Makro case [2012] and subsequent billing authority challenges have narrowed the scope of avoidance schemes using the insolvency exemption.
Can I appeal my commercial property rateable value to reduce empty rates?+
Yes, through the check, challenge, appeal (CCA) process (England). You start by checking the property details on the VOA's rating list, then submit a formal challenge if the rateable value is wrong. If the challenge is not resolved, you can appeal to the Valuation Tribunal for England. A successful appeal is backdated and overpaid rates are refunded. Note that the empty rate charge continues during the appeal — you cannot withhold payment pending the outcome.