Empty Rates

Altus Group has the only dedicated Empty Rates Team in the UK deploying a wide range of innovative strategies and pioneered risk-free approaches to minimise liabilities for developers, property companies, funds and occupiers with vacant property across the country.

That approach led to a ground-breaking appeal win for properties under refurbishment, with the decision paving the way for the Valuation Office Agency to address less favourable treatment of industrial property.

In the Orchard Street Investment Management case, Altus Group successfully put forward the case that a warehouse unit was “incapable of beneficial occupation” for the purposes of business rates from the date that physical works to strip out and refurbish the property had commenced.

The Valuation Tribunal’s decision clarified a point of law from the Supreme Court ruling in Newbigin v Monk, referring to an earlier empty rates victory by Altus Group in the Upper Tribunal in Aviva Investors Property Developments v Whitby.

The VOA had put forward that the unit was undergoing repair works rather than a course of refurbishment. The Valuation Tribunal noted that refurbishment was all the more likely when the premises had just been vacated by the previous tenant but found the argument irrelevant to the case when it was clear that the unit was “incapable of beneficial occupation”.

Long term reform of Empty Rates regulations by the Government is needed to recognise that the current 3 and 6 month exemption periods are inadequate to allow commercial properties to be refurbished, marketed and re-let; with the current climate presenting an ideal opportunity for change through the upcoming review.

This was a timely victory for landlords currently excluded from any of the COVID-19 rate reliefs in respect of their empty properties, whilst facing some months of rent holidays and tenant failures.

There is a continuing requirement for the Empty rates system to be modernised and made fully fit for purpose. We continue to lobby for meaningful change to ensure fairness for ratepayers.

As part of this we believe that Empty rates should not be applied on Retail, Hospitality and Leisure properties to ensure consistency in approach with occupied premises. Any property which becomes vacant as a result of the economic impact of COVID-19 should be exempt from empty rates during the 2020/21 rate year.

The VOA continues to drag its feet in implementing the Supreme Court’s ruling in the Monk case. It has been particularly dismissive of the commercial “ realities in refurbishing and reletting industrial property. The distinctions they make are spurious and deny prompt relief to landlords.

Edward Searle, BSc, MRICS, Vice President, Altus Group