Vacant Commercial Property Rates UK — Empty Property Relief Guide

Empty Property Relief — Periods and Qualifying Properties

Under the Local Government Finance Act 1988 and the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008, mandatory empty property relief applies to a property from the day it first becomes unoccupied. The relief periods are: (i) non-industrial hereditaments (offices, retail, leisure, restaurants, pubs): 3 months of zero rates; after 3 months, 100% of the full rate becomes payable; (ii) industrial hereditaments (warehouses, factories, distribution units, storage facilities): 6 months of zero rates; after 6 months, 100% of the full rate becomes payable. The categorisation of the property as 'industrial' or 'non-industrial' for rating purposes is determined by the Valuation Office Agency (VOA) and is based on the nature of the hereditament, not the use to which the occupying tenant put it. Exemptions from the empty property charge include: listed buildings (exempt while listed at any grade); hereditaments with a rateable value below the small hereditament threshold (currently £2,900 in England); properties occupied by a charity or community amateur sports club and wholly or mainly used for charitable purposes on the last day of occupation; and properties where insolvency practitioners are acting in their official capacity.

• Non-industrial (offices, retail, leisure): 3 months' mandatory rate relief from the day of vacation — zero rates for the first 3 months; 100% rates from day 91
• Industrial (warehouses, factories, distribution): 6 months' mandatory rate relief — zero rates for the first 6 months; 100% rates from day 181
• Listed buildings: exempt from empty property rates while the building is listed (any grade I, II*, or II) — a significant incentive for landlords of listed properties
• Small rateable value exemption: properties with a rateable value below the de minimis threshold (currently £2,900 in England) are exempt from the empty property charge
• Scotland: different system; Scottish Government sets the Non-Domestic Rate poundage and empty property relief thresholds separately; different rateable value thresholds apply; consult the Scottish Assessors Association

The Re-Occupation Reset and Six-Week Rule

The empty property relief period is reset if the property is re-occupied. However, the re-occupation must be genuine and must last for at least 6 continuous weeks (42 days) to qualify for a fresh empty property relief period on the next vacancy. If a property is re-occupied for less than 6 weeks and then becomes vacant again, the new vacancy does not attract a fresh relief period — the new vacant period is treated as a continuation of the existing vacancy. This 6-week rule is designed to prevent artificial short-term occupations being used purely to reset the rates clock. Courts have scrutinised re-occupation arrangements and will look at whether the occupation is genuine — a sham occupation (where the 'occupant' has no real business purpose and is simply used to trigger the reset) will be disregarded, and the landlord will be liable for the full rate throughout. Genuine re-occupation for 6+ continuous weeks: examples might include temporary use by a subsidiary company, storage or processing use, or use by a related business — but the occupation must be real, not contrived, and the occupant must be the person in actual physical possession.

• 6-week re-occupation rule: if a property is re-occupied for 6 or more continuous weeks, a fresh 3- or 6-month empty relief period begins on the next vacation
• Less than 6 weeks: re-occupation for fewer than 42 days does not reset the clock — the new vacancy is treated as a continuation; no fresh relief applies
• Genuine occupation required: courts and billing authorities will scrutinise short re-occupation arrangements; a sham occupation (e.g. stacking cardboard boxes) will be disregarded
• Subsidiary company occupation: re-occupation by a wholly-owned subsidiary that has a genuine business purpose and actual use of the premises may qualify — but the occupation must be real and commercially credible
• Wales: similar 6-week reset rule; Welsh Government sets its own NDR relief provisions; the 'improvement relief' regime in Wales provides additional transitional relief for some refurbished properties

Exemptions and Qualifying Empty Property Relief

Beyond the mandatory relief periods and the exemptions for listed buildings and low-rateable-value properties, there are a small number of other circumstances in which rates on empty property may be reduced or eliminated. Charity exemption: where the last occupier was a charity (or Community Amateur Sports Club), and the property is likely to be used next for charitable purposes, an exemption may apply — but this must be a genuine charitable use, not an arrangement designed purely to exploit the exemption. Insolvency practitioners: where a property is vested in a liquidator, administrator, or receiver acting in their official capacity, the insolvency practitioner is generally not personally liable for rates — but the rate liability may fall on the estate. Partly occupied properties (s.44A LGFA 1988): a billing authority can agree to treat part of a property as if it were a separate hereditament for rating purposes — allowing the landlord to benefit from the empty property relief on the void part while paying rates only on the occupied part; this requires the billing authority's agreement and is discretionary. Hardship relief: billing authorities have a discretionary power to grant hardship relief to ratepayers facing financial difficulty — not commonly granted to commercial landlords, but available in exceptional circumstances.

• Charity exemption: property likely to be used next for charitable purposes qualifies for exemption — must be genuine charitable use; billing authorities investigate arrangements that appear designed to exploit this exemption
• Insolvency: insolvency practitioners acting in their official capacity are generally not personally liable for business rates on empty property — but liability may fall on the estate assets
• Partly occupied relief (s.44A): billing authority may agree to treat a partly empty building as two separate hereditaments — allowing the empty part to benefit from the relief period; requires active application
• Hardship relief: billing authorities have a discretionary power to reduce or remit rates on grounds of hardship; rarely available to commercial landlords but worth considering in genuine financial difficulty
• Local authority discretion: some billing authorities operate additional local reliefs (e.g. Enterprise Zone relief, investment zone relief) — check with the relevant local authority for any area-specific schemes

Challenging the Rateable Value and Legitimate Mitigation

The most effective long-term strategy for managing empty property rates liability is to challenge the rateable value itself — if the rateable value (RV) is too high, the landlord overpays rates both when occupied and when empty. The Valuation Office Agency (VOA) maintains the rating list; the challenge process is the Check, Challenge, Appeal (CCA) scheme (introduced in 2017). Landlords with a property they believe is overvalued should: (i) submit a Check — provide information about the property to the VOA; (ii) submit a Challenge — provide a detailed case for a lower RV; (iii) if necessary, appeal to the Valuation Tribunal (England) or its Welsh/Scottish equivalent. RV reductions can be backdated to the start of the rating period (currently the 2023 rating list, effective from 1 April 2023). Legitimate mitigation during void periods: the primary lawful strategies are (i) genuine short-term licences to occupiers (resetting the 6-week clock); (ii) applying for partly-occupied relief under s.44A where part of the building is genuinely in use; (iii) structural changes that effectively remove the hereditament from the rating list (demolition, conversion to residential — but planning permission required); (iv) challenging the RV via the CCA process. Landlords should take advice from a specialist rating surveyor — RICS-regulated rating surveyors can assess whether the RV is defensible and manage the CCA process.

• Rateable value challenge: the most effective long-term mitigation; submit a Check to the VOA, then a Challenge if the evidence supports a lower RV; appeals to the Valuation Tribunal if necessary
• 2023 rating list: current rating list effective from 1 April 2023 using 1 April 2021 values; RV challenges must identify the correct antecedent valuation date
• Structural changes: demolishing the building, converting it to residential (with planning permission), or making it physically incapable of use as a hereditament can remove it from the rating list — major works required
• Rating surveyor: a RICS-regulated rating surveyor can assess whether the RV is correctly assessed, identify grounds for a challenge, and manage the CCA process; their fees are typically based on RV reduction achieved
• Wales: Welsh rating list maintained by the Valuation Office Agency; appeals go to the Valuation Tribunal for Wales; Welsh Government controls the NDR multiplier independently

Frequently asked questions