With tenant insolvencies on the rise, the question of liability for rates of empty properties has become a matter of importance for the property industry and the differences in the position between Scotland and England has led to lobbying for reform.
In April 2008, empty property relief was extended in Scotland and England to apply to any company which is in administration. As a result, the rates position is now the same for companies in liquidation or administration. This extension applies to all building types for the period in which the company is in administration. This change was implemented largely following concern over the High Court decision in Exeter City Council v Bairstow & Ors, Re Trident Fashions plc, which held that rates were payable as an expense of the administration and meant that companies may have been forced into liquidation, rather than administration, to avoid paying rates.
The following sets out how empty rates relief applies to properties north and south of the border:
- Industrial: 100% relief for unlimited time.
- Retail and Office: 100% for first 3 months. 50% thereafter.
- Properties of low rateable value (under £1,700) and listed buildings: 100% relief for unlimited time.
England and Wales:
- Industrial: 100% relief for first 6 months.
- Retail and Office: 100% for first 3 months.
- Properties of low rateable value (under £2,200) and listed buildings: 100% relief for unlimited time.
In England and Wales, Landlords should be aware that, if they obtain possession of a property, they will only be entitled to relief for the balance of the 3 or 6 month period.
Following the Chancellor's pre-budget report, it is expected that further changes will apply to properties in England and Wales as of the 1st of April 2009, to the effect that vacant properties worth less than £250,000 will be exempt from rates for one year.