Are there any ways that I can avoid paying void rates?
Question:
Are there any ways that I can avoid paying void rates?
Answer:
Inevitably, in these financially strained times, various schemes
and devices have evolved which can assist in a landlord.
Have you considered:-
- a short term letting for a period of six weeks? If it is a genuine letting, then you could claim a further period of relief if the property becomes empty again. You can also find companies on the internet that are willing to be a landlord's rate paying tenant for six weeks or more in return for a fee. Such arrangements should however be treated with care, as they could be challenged under anti-avoidance legislation.
- occupying empty premises yourselves, for example storage purposes, again for at least six weeks? Once the property becomes vacant again, a fresh period of empty relief will be triggered.
- letting to a charity since they benefit from an exemption from rates on unoccupied commercial or industrial premises? When a charity is in occupation they are only liable to pay 20% rates. Therefore, giving a charity the use of a building, even rent free, could be an effective way of avoiding empty rate liability. Again, it is possible to find companies that can arrange for a landlord to make a charitable contribution equivalent to the 20% rate bill incurred by the charity which can then be off-set against tax.
Rates are also only payable on a property that is capable of beneficial occupation. If a property was demolished, then that would bring any rate liability to an end but arguing that a building was in a poor state of repair may not be enough.
Developers may also want to consider deferring practical completion until they have found a suitable tenant, so they could argue that the occupation of the property is legally prohibited and there is no rate liability. It would be well worth asking a health and safety consultant to inspect and give an opinion that occupation would be illegal.
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