The Hidden Cost of Vacancy: Why Empty Commercial Units Still Come with a Price Tag
Am I liable for business rates if the property is vacant?” This is a question that landlords across England and Wales frequently ask, especially during periods of financial uncertainty or tenant turnover.
Understanding business rates on empty commercial properties is crucial to ensuring you avoid unexpected bills and legal complications. Empty property relief offers some temporary relief, but it doesn’t last forever.
And once it ends, you may once again become liable, even if no rental income is being generated.
In this article, we will explore in detail the rules around business rates for vacant commercial properties, when landlords are liable, what exemptions or reliefs exist, and what practical options are available to reduce or mitigate this liability.
What Are Business Rates?
Business rates are a form of property tax charged on most non-domestic properties, including shops, offices, warehouses, and factories. They are calculated based on the property’s “rateable value,” which is determined by the Valuation Office Agency (VOA).
Local councils are responsible for collecting these rates, and the funds are used to support local services. If a property is occupied, the tenant is typically responsible for paying the business rates. But what happens when the property becomes vacant?
Am I Liable for Business Rates if the Property is Vacant?
Yes, you are liable for business rates if the property is vacant, unless you qualify for an exemption or temporary relief.
Generally, when a commercial property becomes empty, it is exempt from business rates for a limited time. After this period, full rates become payable again, regardless of whether the property is generating income or not.
This can put substantial financial pressure on landlords who are unable to find new tenants quickly.
So, am I liable for business rates if the property is vacant? Unfortunately, the answer is yes in most cases, although there is a short exemption period. Knowing how and when liability kicks in is essential.
How Long Does Empty Property Relief Last?
The standard period of empty property relief is as follows:
- 3 months for most commercial properties, such as offices and retail units.
- 6 months for industrial and warehouse properties.
During this exemption period, no business rates are charged. However, after the exemption ends, the landlord becomes fully liable again unless another form of relief applies.
It’s important to note that this relief resets only when the property has been occupied for a continuous period of at least 6 weeks. Simply bringing someone in for a short period won’t be enough to trigger a new relief period.
Which Properties Are Exempt from Business Rates While Vacant?
Some vacant properties are permanently exempt from business rates, including:
- Properties with a rateable value below the threshold for exemption.
- Properties listed as buildings of special architectural or historical interest.
- Properties owned by charities and intended for charitable use.
- Properties undergoing major structural repairs or reconstruction (with supporting evidence).
- Properties owned by companies in administration or liquidation.
However, if your property doesn’t fall into one of these exempt categories, you are likely to be liable after the initial relief period ends.
Why Are Landlords Still Liable Even with No Rental Income?
The key principle behind business rates is that they are a tax on property ownership or occupation, not on business activity or rental income. That means:
- The liability rests with the party entitled to occupy the property.
- If the property is vacant, this liability typically transfers back to the owner or landlord.
- The law makes no allowances for personal financial hardship.
Am I liable for business rates if the property is vacant? Yes—even if you’re not earning any rent from it. That’s why strategic property management is essential.
Practical Steps Landlords Can Take
There are limited—but essential—steps landlords can take to mitigate or delay business rate liability:
Secure Short-Term Occupation
If the property is reoccupied for 6 weeks or more and then vacated again, the empty property relief can be reset. This is commonly done through short-term licenses or pop-up shop agreements.
Apply for Hardship Relief
Some councils offer discretionary hardship relief, although this is rarely granted and typically requires evidence of exceptional financial distress.
Check for Errors in the Rateable Value
If you believe the VOA has overvalued your property, you can challenge the valuation. A lower rateable value can significantly reduce your bill.
Consider Charitable Occupation
Letting the space to a charity for a limited time could provide an 80% rate relief. This must be genuine, not a sham.
Demolition or Structural Works
If your property is undergoing demolition or structural repairs, you may be eligible for a temporary exemption. This usually requires a formal inspection and confirmation from the VOA.
Seek Legal and Valuation Advice
A specialist solicitor or surveyor can help navigate complex relief applications, appeals, or structuring short-term lets to your advantage.
Enforcement and Penalties for Non-Payment
Once the local council determines you are liable for business rates, they will issue a demand notice. If you fail to pay:
- Reminder notices will be issued.
- Court proceedings may follow, resulting in a liability order.
- Bailiffs or enforcement agents may be appointed to recover the debt.
- In extreme cases, it can lead to insolvency proceedings.
So, while it might seem tempting to ignore the bill for a property with no tenant, it can lead to severe consequences if left unpaid.
How to Plan Ahead as a Landlord
If you’re holding commercial property, whether vacant or tenanted, the best course of action is to build business rates into your financial forecasting. You should:
- Monitor lease expiry dates to avoid unexpected voids.
- Maintain a pipeline of potential tenants or short-term occupiers.
- Keep detailed records of occupancy to qualify for relief where applicable.
- Budget for at least 3 months of business rate exemption, then full liability.
Conclusion
Am I liable for business rates if the property is vacant?
The short answer is yes—unless specific exemptions apply or you qualify for temporary relief. Business rates can become a major expense for landlords during periods of vacancy, so it’s essential to plan proactively and understand the available reliefs and exemptions.
Many landlords mistakenly assume they are not responsible for rates when a tenant moves out. However, the law is clear: after a brief relief period, liability falls back on the owner.
Am I liable for business rates if the property is vacant? Repeating the question underscores the reality—yes, and you need to act accordingly.
FAQs
How long is the empty property exemption for commercial properties?
Most commercial properties are exempt from business rates for 3 months after they become vacant. Industrial and warehouse properties typically benefit from a 6-month exemption.
Can I avoid business rates if my property is undergoing repairs?
Yes, in some cases. If the works are substantial enough to render the property incapable of occupation, you may be able to apply for a temporary exemption. You’ll need evidence and possibly an inspection by the VOA.
What happens after the exemption period ends?
After the relief period ends, full business rates become payable again, even if no income is being received. The liability transfers back to the landlord or property owner.
Does short-term occupation reset the relief period?
Yes, if the property is reoccupied for at least 6 weeks continuously, then vacated, a new exemption period may apply. It must be a genuine occupation, not artificial.
Is charitable occupation a viable option to reduce rates?
Letting your property to a registered charity may reduce business rates by 80%. However, the occupation must be legitimate and not just to avoid rates.
What if I simply don’t pay the business rates?
Failing to pay can result in legal action, enforcement agents, and potentially insolvency proceedings. Councils are aggressive in recovering these debts, so avoidance is not recommended.
Who is responsible if the tenant leaves before the lease ends?
Responsibility generally returns to the landlord once the property is empty. However, some lease terms may continue to hold the tenant liable if they have not formally surrendered the lease.
Can I challenge my business rates liability?
Yes, you can appeal the rateable value with the VOA. If successful, this could reduce your liability, but you’ll need solid grounds and documentation.
Are business rates deductible for tax purposes?
Yes, for landlords who operate as a business, business rates are usually tax-deductible expenses, reducing overall taxable income.
Where can I get help with managing my liability?
Consulting with a specialist property solicitor or chartered surveyor experienced in business rates can save time, stress, and potentially thousands of pounds.
If you’re asking, “Am I liable for business rates if the property is vacant?” — you’re not alone. It’s one of the most common concerns among commercial landlords today.
Understanding your obligations and acting promptly can prevent costly surprises and ensure you manage your property portfolio wisely.
The British Landlords Association is a national landlord association for UK landlords and one of the most significant landlord associations in the UK. The BLA is the only commercial llandlords’association in the UK. Join us now for £79.95!
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