The most significant business rates issue for commercial landlords is empty property rates. When a commercial property becomes vacant — at the end of a lease, between lettings, or when a tenant leaves — the owner is entitled to a 3-month exemption from rates (6 months for industrial or storage properties). After that exemption expires, the owner becomes liable for the full business rates on the empty property. For a commercial property in a city centre with a high rateable value, this can amount to tens of thousands of pounds per year in rates on a property generating no rental income — a major cash flow problem during extended void periods.
Understanding the available reliefs — and legitimate mitigation strategies for empty property rates — is therefore a core commercial landlord skill. The two most used mitigation strategies are periodic re-occupation (allowing a genuine commercial occupier into the property for at least 6 weeks, which restarts the 3-month exemption period) and charity occupation (allowing a registered charity to use the property as rateable occupier, which attracts 80% mandatory relief). Both strategies require genuine commercial activity — courts and local authorities scrutinise artificial or sham occupation schemes.
How business rates are calculated, reliefs and empty property rate mitigation
The rates calculation, key reliefs available to commercial landlords, and strategies for managing empty property liability:
- Calculation, occupier/owner liability, and key reliefs: How business rates are calculated: Business rates = Rateable Value (RV) × Uniform Business Rate (UBR). Rateable Value: assessed by the Valuation Office Agency (VOA) in England and Wales (Rating Assessors in Scotland) — the estimated annual rental value of the property at the antecedent valuation date (for the 2023 rating list, the antecedent valuation date was 1 April 2021). RVs are on the 2023 rating list (effective from 1 April 2023; current). Uniform Business Rate (UBR) 2024/25 (England): standard rate 54.6p in the pound; small business rate 49.9p (applies to properties with RV under £51,000 and where the ratepayer does not claim Small Business Rate Relief for another property). Who is liable: the occupier of a non-domestic property pays business rates. When the property is let, the tenant as occupier is liable. When the property is empty, the owner (whether freehold or leasehold) becomes the rateable person and is liable for any rates due. Small Business Rate Relief (SBRR) — England: available to ratepayers who occupy a single property in England with a rateable value below £51,000. 100% relief for RV up to £12,000 (no rates payable); tapered relief from 100% down to 0% for RV between £12,001 and £15,000; standard small business UBR applies for RV £15,001-£51,000. Retail, Hospitality and Leisure (RHL) relief: the government periodically provides RHL relief as a percentage discount for qualifying retail, hospitality, and leisure properties — check current government guidance for the relief percentage for 2024/25; the relief is applied automatically by local authorities for qualifying properties. Charitable relief: registered charities that are the rateable occupier of a property receive 80% mandatory relief on business rates; the local authority may grant up to a further 20% discretionary relief. Note: the charity must be the genuine rateable occupier — simply allowing a charity to use the space occasionally is not sufficient; the charity must have exclusive occupation and use the property principally for charitable purposes. Rural rate relief: properties in rural settlement areas (village with population under 3,000) used as: the sole general store; the sole post office; the sole public house; or a petrol filling station — 100% mandatory relief.
- Empty property rates, mitigation strategies and rating appeals: Empty property rates: once a commercial property becomes empty, the owner is entitled to a rates-free period: (a) general commercial property (offices; retail; other): 3 months' exemption from the date the property became empty; (b) industrial and storage property (warehouses; factories; industrial units): 6 months' exemption. After the exemption period expires, the owner pays full business rates on the empty property. There is no cap on empty property rate liability — it continues indefinitely until the property is re-occupied or qualifies for a further exemption. Empty property exemptions (continuing after the initial exemption period): (a) property with RV below £2,900 — 100% exempt; (b) listed buildings — exempt; (c) properties where the owner is an insolvency practitioner in their capacity as such; (d) properties where the owner has been prohibited from occupying by law; (e) properties that would constitute Crown property. Empty property rate mitigation strategies: (1) Periodic re-occupation (the 'six-week cycle'): if a property is re-occupied for at least 6 weeks of genuine commercial activity, this restarts the 3-month exemption period when the property next becomes empty. Local authorities and the courts (following Makro Self Service Wholesalers Ltd v Nuneaton [2012]) scrutinise whether occupation is genuine. The 6-week period must involve genuine commercial occupation — merely holding keys; using as storage; or a sham arrangement does not qualify. (2) Charity occupation: if a registered charity becomes the genuine rateable occupier of the property, 80% mandatory charitable relief applies; effectively reducing the empty rates liability to 20% of what the owner would otherwise pay. The charity must be the genuine occupier — again, sham arrangements are challenged. (3) Listed building exemption: if the property is a listed building, it is exempt from empty property rates — a useful exemption for heritage commercial properties. (4) Properties below RV £2,900: exempt from empty rates regardless of how long they have been empty. Rating appeals — challenging the rateable value: if a landlord (or their tenant) believes the VOA has set the rateable value too high, it can be challenged through the Check, Challenge, Appeal (CCA) process: Step 1 — Check: log into the VOA business rates portal; check or provide information about the property; the VOA may revise the RV or confirm it. Step 2 — Challenge: formally challenge the RV if still believed to be incorrect; the VOA investigates; a decision is issued. Step 3 — Appeal: if the challenge is rejected, appeal to the Valuation Tribunal for England (or Valuation Tribunal for Wales; or Valuation Appeal Panel in Scotland). Time limit: challenges must generally be made during the validity of the rating list in question. Scotland: the Small Business Bonus Scheme (SBBS) provides: 100% relief for properties with RV up to £12,000; 25% relief for RV £12,001-£15,000; 25% relief for RV £15,001-£18,000 where the combined RV of all properties is under £35,000. The Scottish UBR is set annually by the Scottish Government (differs from England/Wales). Scotland also operates a 2023 revaluation (effective 1 April 2023). Wales: the Welsh UBR is set by the Welsh Government; small business rate relief thresholds differ from England; 100% relief for RV up to £6,000 (Wales); 50% relief for RV £6,001-£12,000 (Wales)
Frequently asked questions
Who pays business rates when a commercial property is tenanted?+
The tenant (as the occupier) pays business rates when a commercial property is let and occupied. Rates liability follows occupation: whoever is in rateable occupation of the property pays the rates. Your lease should make clear whether the tenant is responsible for business rates — in most commercial leases, the tenant covenant includes paying all rates, taxes, and outgoings. If the property is unoccupied, the owner becomes liable for empty property rates after the initial exemption period expires.
How long is the empty property rates exemption for commercial property?+
General commercial property (offices, retail, other): 3 months' exemption from the date the property became empty. Industrial and storage property (warehouses, factories): 6 months' exemption. After those periods expire, the owner pays full business rates on the empty property with no automatic cap. Ongoing exemptions apply to listed buildings, properties with RV below £2,900, and certain insolvency situations. Each time the property is genuinely re-occupied for at least 6 weeks, a new exemption period begins when it next empties.
What is the six-week mitigation strategy for empty business rates?+
If a commercial property is genuinely re-occupied for a continuous period of at least 6 weeks by a genuine commercial occupier, the owner qualifies for a new 3-month (or 6-month) empty rates exemption period when the property next empties. Local authorities and courts scrutinise these arrangements closely: the occupation must be genuine (real commercial activity; actual use; not just holding keys or token visits). Sham occupation — having a friend 'use' the property nominally for 6 weeks — is likely to be challenged, with full rates backdated. Document the occupier's genuine use; have a formal short-term licence agreement in place.
How do I appeal my commercial property's rateable value?+
Use the Check, Challenge, Appeal (CCA) process via the VOA's business rates portal. Step 1 — Check: verify or provide information about your property to the VOA; they may revise the rateable value. Step 2 — Challenge: if the RV remains too high, submit a formal challenge; the VOA investigates and issues a decision. Step 3 — Appeal: if the challenge fails, appeal to the Valuation Tribunal for England (or equivalent in Wales/Scotland). There is no fee for a Check or Challenge; appeals to the Valuation Tribunal currently carry a modest fee. Success reduces your rate liability retrospectively from the effective date of the challenge.
- CRAR — commercial rent arrears recovery for commercial landlords →
- LTA 1954 — commercial tenancy security of tenure →
- Mixed-use property — residential and commercial rates split →
- Council tax — residential property council tax obligations →
- Unoccupied property — empty homes premium and void strategies →
- VAT exemption — residential and commercial property VAT →