It could not have come at a worse time; As landlords with empty units and tenants with too much space both know since 1 April 2008 empty rates relief on industrial space has been limited to a period of six months. In the case of landlords, this has left them with the hard prospect of not only no income on a property but also the burden of having to pay business rates at the same level as if the property were occupied.
However, the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008/386 (the “2008 Regulations”), which abolished the indefinite relief that had previously been granted to landowners who held empty properties, does provide that after at least six weeks continuous occupation a landowner can claim a further 6 months relief leading to some landowners using properties intermittently in order to get the maximum benefit from empty rates relief.
A recent case in the High Court has considered such a scheme. Here, the tenant, Makro Properties Limited, surrendered its lease of an industrial unit in June 2009 agreeing with its landlord to store 16 pallets of documents in the 140,000 sq ft shed. This agreement continued for a period between November 2009 and January 2010 so creating a period of at least six weeks occupation after which the former landlord would be entitled to claim another six months empty rates relief.
However, on considering the application the council did not consider that the landlord was eligible for empty rates due to the small proportion of the property being used.
The Court disagreed with the council and decided that the use did amount to rateable occupation holding that there was an intention to occupy the property by Makro as the company had to store its pallets and the documents somewhere in order for them to be retained. The Court did not consider it relevant that the agreement and occupation of the property was intentionally done to break the period of occupation and so allow the landlord to claim further empty rate relief.
This decision comes at a time when the Government is already under pressure to reassess empty rates relief. It will be interesting to see how matters develop over the coming months.