You can avoid paying business rates on empty commercial properties through several legitimate methods, including using property guardians to convert the property to residential use, letting to short-term tenants to reset the exemption period, leasing to charitable organisations for significant rate reductions, or qualifying for extended empty property relief if your building meets specific criteria.
According to recent market data, commercial property vacancies are currently at a four-year high, with one in ten UK shops standing empty. This vacancy crisis has significant financial implications, as local authorities collect over £1 billion annually in empty property business rates. With such substantial sums at stake, it’s no wonder property owners are actively seeking ways to mitigate these costs during periods when their buildings aren’t generating income.
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Understanding Empty Property Business Rates: The Basics
Empty property business rates were introduced under the 2007 Rating (Empty Properties) Act, which significantly reduced the relief periods previously available to property owners. Under current regulations, most non-industrial commercial properties receive just three months of exemption from business rates after becoming vacant, while industrial premises (such as warehouses) benefit from a slightly longer six-month relief period.
Once this initial exemption expires, owners face paying 100% of the standard business rates despite generating no income from the property. This policy was introduced to encourage owners to bring vacant properties back into use quickly, but in challenging market conditions, finding new occupants within these timeframes can prove difficult.
The financial burden can be substantial. For a medium-sized commercial unit with a rateable value of £50,000, the annual business rates bill could exceed £25,000 – a significant sum to pay for a non-income-producing asset. This explains why savvy property owners are keen to explore all available options for reducing or eliminating this liability.
Properties That Automatically Qualify For Extended Empty Rate Relief
Certain types of properties are exempt from empty property rates either indefinitely or for extended periods. These include:
Listed buildings (exempt until reoccupied)
Properties with a rateable value under £2,900 (exempt until reoccupied)
Industrial premises (additional 3 months relief beyond the standard period)
Properties owned by charities (if next use will be mostly for charitable purposes)
Community amateur sports clubs buildings (if next use will be mostly as a sports club)
Properties where the owner is prohibited by law from occupying
Buildings kept vacant due to Crown or public authority action
Properties included in the schedule of monuments under the Ancient Monuments and Archaeological Act 1979
Properties where the owner is in administration, bankruptcy, or subject to a winding-up order
If your property falls into any of these categories, you should contact your local council to ensure you’re receiving the appropriate relief. Don’t assume they’ll automatically apply these exemptions – it’s often necessary to make a formal application.
Property Guardians: A Popular Solution For Commercial Buildings
One of the most effective methods to avoid business rates on empty properties is the use of property guardians. This approach involves allowing individuals to live temporarily in your vacant commercial building, effectively converting it from commercial to residential use. This classification change means the property becomes subject to council tax rather than business rates, typically resulting in savings of around 90%.
Here’s how the property guardian system works in practice:
You engage a property guardian company who finds suitable individuals to occupy your building
The guardians pay the management company for the right to live in the space
The property is now classified as residential for rating purposes
You pay council tax instead of business rates
The property remains secure and maintained by the occupants
Property guardian schemes are entirely legal and recognised by councils as a legitimate means of mitigating empty rates liability. Crucially, this arrangement doesn’t constitute a formal change of use for planning purposes, as it’s considered temporary occupation. This means you can still market the property as commercial space and return it to business use when you find a suitable tenant or buyer.
Richard from Coventry experienced this firsthand after his retail premises became vacant following a tenant’s insolvency. “I was facing over £30,000 in annual business rates for an empty shop unit that wasn’t generating any income. After researching options, I implemented a property guardian solution that reduced my liability by nearly 90%. The guardians kept the property in good condition, and I was still able to arrange viewings for potential new tenants.” If you’re struggling with similar challenges and considering options to sell commercial property or find alternative solutions, Property Saviour can help you explore all available options with sensitivity to your specific circumstances.
Using Short-Term Tenancies To Reset The Exemption Period
Another popular strategy involves using short-term tenancies to reset the exemption period. If you can find a tenant willing to occupy your property for at least six weeks, the exemption clock will restart once they vacate, giving you another three or six months (depending on property type) of rates exemption.
This approach requires:
A genuine tenant who actually occupies the space
A legitimate lease agreement
Evidence of occupation (utility bills, business activity, etc.)
A minimum occupation period (typically 6-8 weeks)
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Comparison of Empty Property Rate Mitigation Strategies
This table outlines the major strategies available to property owners, along with their potential savings, complexity of implementation, level of risk, and ideal application scenarios. As you can see, each approach has its advantages and limitations, so the best choice depends on your specific circumstances, property type, and longer-term plans.
| Strategy | Potential Savings | Complexity | Risk Level | Best For |
|---|---|---|---|---|
| Property Guardians | 80-90% | Medium | Low | Secure buildings suitable for habitation |
| Short-term Tenancies | 100% for reset period | Medium | Medium | Properties likely to be let/sold soon |
| Charity Leasing | 80-100% | Low | Low | Longer-term vacant properties |
| Business Rates Mitigation Scheme | 75% | Low | Medium | Any commercial property |
| Demolition | 100% | High | High | Buildings with no future value |
The short-term tenancy approach works particularly well for properties that are likely to be reoccupied or sold in the near future, as it can provide complete relief during the marketing period. However, it requires finding willing tenants and ensuring their occupation meets the criteria to be considered genuine by the local authority.
Charity And Religious Organisation Leases For Significant Rate Reductions
Leasing your empty commercial property to a charitable or religious organisation can provide substantial relief from business rates. Charities typically receive an 80% reduction in business rates, while properties used exclusively for religious purposes can qualify for 100% exemption.
For this strategy to work:
The charity must be registered with the Charity Commission
The property must be used wholly or mainly for charitable purposes
The arrangement must be genuine and documented properly
The charity should actually use the space for its activities
This approach has become increasingly popular, especially for larger retail units and office spaces that remain vacant for extended periods. Many charities are willing to enter into flexible arrangements that still allow the property to be marketed to commercial tenants.
One Reddit user shared their experience: “After our office building sat empty for months, we approached a local educational charity about using the space for their training programmes. They were delighted to have the premises, and we received an 80% reduction in our rates bill. The arrangement included a short notice period so we could still proceed quickly if a commercial tenant was found.”
At Property Saviour, we’ve seen this strategy work particularly well for property owners who want to contribute positively to their communities while reducing their financial burden. The key is finding a charity whose activities align with your property’s features and location, creating a mutually beneficial arrangement that satisfies the rating authorities.
Business Rates Mitigation Schemes: How They Work?
Several specialist companies offer formal business rates mitigation schemes that claim to reduce empty property rates liability by up to 75%. These schemes typically work by installing a tenant who uses the property for a specific, limited purpose such as proximity marketing (localised Bluetooth distribution of advertising content).
These schemes:
Often require minimal equipment (such as a small WiFi box)
Don’t interfere with property viewings or marketing
Create a pattern of occupation and vacancy that maximises relief periods
Are managed entirely by the scheme provider
Charge fees based on a percentage of the savings achieved
According to one provider, their scheme has saved over £2 million for UK property owners since 2019. However, it’s important to understand that local authorities may challenge such arrangements if they believe they’re not genuine occupations. Before entering into any mitigation scheme, verify that it’s supported by case law and has a proven track record of success.
What Is Partial Occupation Relief And How To Apply For It?
If your commercial property is partly occupied, you may be eligible for relief on the empty portion. This can be particularly useful during phased move-ins or move-outs, or when only part of a building is usable due to renovation work.
To qualify for partial occupation relief:
The partial occupation must be for a temporary period
There must be a clear physical separation between the occupied and unoccupied parts
You need to apply to your local council, who will arrange an inspection
The council will issue a “Section 44A certificate” if approved, which splits the rateable value between occupied and unoccupied parts
This relief is discretionary, and local authorities may apply different criteria when considering applications. It’s typically granted for a limited period, often three months initially, though extensions may be possible in certain circumstances.
Can You Avoid Business Rates By Demolishing The Property?
In extreme cases where a property has limited future potential, demolition might be considered as a way to eliminate business rates liability. Once a property is demolished, it’s removed from the rating list and no further business rates are payable.
However, this drastic approach should only be considered after careful cost-benefit analysis. The expenses involved in demolition, security, and potential future rebuilding costs must be weighed against the rates savings. Additionally, planning implications must be considered, as demolition may affect future development rights.
This strategy is typically only viable for properties that:
Have limited architectural or historical value
Are in poor structural condition
Have low prospects for future occupation
Are located in areas planned for redevelopment
If demolition seems like the only option for your vacant commercial property, it may be worth considering whether selling the property might be a better alternative. At Property Saviour, we understand the challenges of owning unproductive commercial assets and can offer solutions tailored to your specific situation with speed and certainty.
What Happens If You Don’t Pay Empty Property Business Rates?
Failing to pay empty property business rates can lead to serious consequences. Local authorities have strong enforcement powers and will typically follow this process:
Issue a reminder notice after the first missed payment
If payment isn’t made within 7 days, they can demand the full year’s rates immediately
Apply to the magistrates’ court for a liability order (adding court costs to your bill)
Use enforcement agents (bailiffs) to seize goods to the value of the debt
In some cases, initiate insolvency proceedings against the property owner
Emma from Bristol faced this situation when she inherited a commercial property from her father. “I didn’t realise I was responsible for the business rates until I received a summons to court. By then, the debt had grown substantially with added costs and interest. I was completely overwhelmed by the situation and didn’t know where to turn.” Emma eventually contacted Property Saviour, who provided guidance on her options and helped her find a solution that addressed both the immediate financial pressure and her longer-term property concerns. If you’re facing similar challenges with an empty commercial property, reaching out sooner rather than later can help prevent escalation of the situation.
How To Appeal Your Property’s Rateable Value?
One approach to reducing your empty property rates liability is to challenge the rateable value of your property. The rateable value should reflect the annual rent the property would command on the open market, and if this is set too high, you could be paying more than necessary.
To appeal your property’s rateable value:
Check your current valuation on the Valuation Office Agency (VOA) website
Gather evidence that supports a lower valuation (local rental comparisons, property condition issues, etc.)
Submit a ‘Check, Challenge, Appeal’ application through the VOA website
Consider using a professional rating surveyor for complex cases
While this process won’t eliminate your empty rates liability entirely, a successful appeal could significantly reduce the amount payable. This is particularly worth exploring if your property is in an area where rental values have declined since the last revaluation.
Can I Get Hardship Relief For My Empty Commercial Property?
If paying empty property rates would cause you financial hardship, you may be eligible for hardship relief. This is a discretionary relief granted by local councils under Section 49 of the Local Government Finance Act 1988.
To qualify, you typically need to demonstrate that:
Paying the full rates would cause genuine financial hardship
It’s in the interests of local taxpayers for the council to grant relief
There are exceptional circumstances beyond normal business risk
Each local authority sets its own criteria for hardship relief, and you’ll need to provide detailed financial information to support your application. This relief is generally intended as a temporary measure rather than a long-term solution to empty property rates.
Comparison of relief options
Remember, while these strategies can help reduce your business rates burden, it’s always best to consult with a professional advisor or your local council for the most up-to-date and relevant advice for your specific situation.
| Method | Duration | Pros | Cons |
|---|---|---|---|
| Empty property relief | 3-6 months | Automatic | Limited time |
| Charitable occupation | Ongoing | 80-100% relief | Must be genuine charity use |
| Property guardians | Ongoing | Switches to council tax | Requires management |
| Change of use | Permanent | Long-term solution | Planning permission needed |
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Avoidance of Future Market Uncertainties
At Property Saviour, we understand the challenges of owning an empty commercial property. While there are strategies to mitigate costs, selling your vacant property could be the most beneficial solution for your financial future.
We specialise in buying problematic properties quickly for cash, including empty commercial buildings. Our process is straightforward, with no estate agents, surveys, or last-minute price reductions.
We can complete the purchase within 10 days or at a timescale that suits you.
If you’re considering selling your empty commercial property, get in touch with us today. We’ll provide a fair, no-obligation offer and can even contribute £1,500 towards your legal fees. Let Property Saviour help you turn your vacant asset into a financial opportunity.
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