If a property becomes unoccupied, the owner is entitled to 100% relief from business rates for a period of three months in the case of shops and offices, or six months in the case of industrial or warehouse premises.

Subject to various exceptions, full rates again become payable at the end of the relevant period, whether or not the property remains unoccupied. One of those exceptions is where the property has become unfit for occupation.

However, to qualify as unfit for occupation, the property has to be beyond economic repair.

Case law

Newbigin (Valuation Officer) v S J & J Monk [2015] EWCA Civ 78

This case is a reminder of the point that, to qualify as unfit for occupation, a property has to be beyond economic repair.

In this case, the property owner claimed exemption from empty rates because it had stripped out the air conditioning system, wiring, sanitary fittings and ceiling tiles, in preparation for redeveloping the property as three separate units.

The Court of Appeal held that each of the stripped-out items was a subsidiary part of the premises as a whole. Replacing each of those items would therefore count as an economic repair.

The ratepayer's intention to redevelop the property was irrelevant, said the court. Empty rates were payable.

Moral (I): The old trick of stripping-out a building to avoid rates won't always work.

Moral (II): Developers undertaking redevelopments may have to factor empty rates into their costs budgets.