Business rates: the curse of the empty property. What reliefs can ratepayers seek during coronavirus pandemic?

Covid-19 has caused untold disruption to business and has caused many businesses to shut up shop or, at the very least, to reduce their physical presence in their workplaces.

Corporate occupiers are being encouraged to find amicable solutions with their landlords as to rent and other occupation charges. But what about business rates?

The Government has brought in measures to assist certain types of businesses, but the measures are not sufficiently comprehensive to help all those suffering because of closure and social distancing guidelines. Occupiers will be keen to see savings on their rates bills but, as so often, the process for obtaining reliefs can be anything but straightforward and there is no guarantee that relief applications will be successful.

Most of the reliefs will be heavily fact- and business-specific, so please treat the below advice as a non-exhaustive summary of options open to ratepayers who are burdened with empty properties.


            Retail, hospitality and leisure

Rate reliefs

  • Normal rates exemptions and reliefs continue to apply alongside the Government guidance. Hardship relief, though rarely granted, can be sought. Businesses can apply for 3 or 6 months’ empty rate relief if their premises are genuinely ‘empty’. Be aware that this will be difficult to prove if the occupier is still retaining some benefit from the use of the premises – eg. facilities, IT, sporadic use by employees. Relief can apply in certain circumstances to partially occupied premises as well.

Mitigation schemes

  • You may still employ lawful mitigation schemes. 6 weeks’ occupation triggers a further entitlement to a rates holiday and the schemes can be used repeatedly.

Occupation prohibited by law

  • Has your business property been closed because of a prohibition by law or by action of a public authority? These reliefs need careful consideration and have been construed strictly. Businesses which have been ‘forcibly’ closed by recent legislation may well be eligible, but where partial or temporary use is still possible and/or the premises could be used for an alternative purpose, then difficulties arise. Government advice on social distancing and non-essential travel/working may help the ratepayer here. The relief applies throughout the duration of the enforced closure.

Material Change of Circumstances

  • Has your business been subject to a Material Change of Circumstance (MCC)? Whilst not a genuine ‘relief’ which is granted by your local authority, you can exercise your right to check, challenge and appeal on the basis that the value of your premises is wrong because of a MCC. MCCs can apply to changes in the physical state or use of your property, or to physical changes or changes of use and occupation in the nearby area. Such changes may relate to factors such as social distancing advice, the closure of neighbouring shops upon which you have a dependency, business closures and transport restrictions. Again, caution needs to be exercised when considering the likelihood of success of this approach. As well as proving the ‘change’, ratepayers need to show that the change has had a material impact upon rateable value, which can be difficult when the length and severity of restrictions are still under review. It will also take some time for the challenge to work itself through the system, which, although it does not help immediate cashflow problems, may help ratepayers in the long-run to identify and justify their MCC grounds.

2021 Rating List

  • Do not forget that the 2021 List will also be soon upon us. Although in force from April 2021, the valuations are treated as at the economic date of April 2019, so prudent ratepayers will be in touch with their surveyors on both the likelihood of valuation changes and the impact of transitional relief.

Further advice

If you need further advice on this topic, please get in touch with your normal Real Estate contact at Mills & Reeve LLP or please contact Richard New.

Visit the Mills & Reeve Coronavirus hub here.

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Every piece of content we create is correct on the date it’s published but please don’t rely on it as legal advice. If you’d like to speak to us about your own legal requirements, please contact one of our expert lawyers.

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