Business Rates Relief on Empty Properties, <i>Real Estate Intelligence</i>

Business Rates Relief on Empty Properties, Real Estate Intelligence

The Rating (Empty Property) Act 2007 and the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008 provide for an initial three month period of 100% relief from business rates when a property first becomes empty (such period of relief lasts for six months in the case of industrial and warehouse property).

Property owners can benefit from subsequent rate-free periods provided that there is an intervening period of six weeks or more in which the property is occupied.

It is considered that there are four factors required in order for there to be rateable occupation:

  1. actual occupation or possession (which involves actual use of the land and includes consideration of both intention and use);
  2. the occupation or possession must be exclusive;
  3. the occupation or possession must be of some value or benefit to the occupier or possessor; and
  4. the occupation or possession cannot be too transient and must have a sufficient quality of permanence. 

Case law suggests that even very slight occupation can amount to rateable occupation and such occupation for a period of six weeks or more can trigger a fresh rate-free period once such occupation ceases. This article summarises some recent examples of such cases.

Makro Properties Limited ("Makro"): Pallets and Papers

In June 2012 judgement was handed down by the High Court in the case of Makro Properties Limited v Nuneaton & BED Worth Borough Council. In this case the landlord had sought to occupy its own premises for the requisite six week period by allowing a group company to store 16 pallets of paperwork. Such occupation amounted to around 0.2% of the floor area of the property, which comprised over 13,000 square metres, and the group company occupied under a non-written informal intra-group permission. The Judge held that such circumstances did amount to occupation – this meant that the landlord was successful in qualifying for a second rate-free period once the occupation ceased.

In determining whether there was rateable occupation, the Judge decided that there was sufficient intention to occupy but went on to consider whether the occupation was too "miniscule" or "trifling" as to constitute actual occupation and whether such occupation was of any value to the occupier.

In terms of actual occupation, the case appears to imply that there is now no substantial threshold in terms of what amounts to actual occupation, provided there is an intention to occupy. As for the value to the occupier, the Judge held that as the pallets contained documents that the company was bound by law to retain, the storage was of practical benefit. The Judge stated that "the storage of 16 pallets of documents which are required by law to be stored cannot be said be trifling".

A subsequent Magistrates decision has followed these principles, where it was held that short term storage (including empty boxes) did amount to rateable occupation.

Stage Electrics Partnership Limited ("Stage"): Salt and Grit

In the 2012 Magistrates decision of Vale of Glamorgan Council v Stage Electrics Partnership Limited, Stage had sub-leased a property and when the sub-tenants exercised their break right Stage was granted empty property rates relief. Stage started to market the property to new tenants but then moved in and used them for its own storage needs (and business rates were once again paid). Stage then moved out and claimed relief. The local authority refused relief on the basis that the premises were "awaiting something to store" and were, as such, still occupied.

The legal basis for the claim subsequently changed and the case centred around Stage's intention to vacate; here it was important that the Judge found that Stage's attempts to market the property had been genuine and their intention was not to use the premises as a storage facility in so far as they could make do without it. Judgement was in their favor.

This case differs from Makro as it was not a question of the degree of usage required to amount to rateable occupation, but rather a question of whether Stage's intention to vacate and claim relief was genuine.

Stirling Investment Properties LLP ("Stirling"): Bluetooth transmitter

In May 2013 the High Court handed down judgement in Stirling Investment Properties LLP v Sunderland City Council and held that the property (an industrial warehouse of 1,500 square metres) was occupied for the purposes of business rates when housing a Bluetooth server measuring 95 x 65 x 30mm with a battery measuring 350 x 240mm and a wire aerial draped out of a window.

In this instance the premises were let for 43 days at a nominal rent – the permitted use of the premises during this time was for Bluetooth marketing and advertising services.

The High Court held, in particular, that the tenant's occupation was rateable despite the fact that such a small amount of space was utilised because the nature of the tenant's undertaking was such that it had identified the optimum location for its equipment.

Another key issue was whether the occupation was actually of some benefit to the occupier – the evidence of the director of the occupier that the Bluetooth device had transmitted 1789 messages from Crimestoppers during the period of occupation, and that the company was building a national network which would eventually consist of 100,000 servers, was sufficient.


These examples illustrate that cases are very much dependant on their own facts, but in some cases only very slight occupation which is of marginal benefit to the occupier may amount to rateable occupation, triggering a fresh rate-free period once such occupation ceases. In Makro, the Judge remarked that the "court is not a court of morals, but of law" and further "if the outcome of this case is seen as unacceptable then it is for the legislature to determine whether further reform is needed".

Lawyer Contacts

For further information, please contact your principal Firm representative or one of the lawyers listed below. General email messages may be sent using our "Contact Us" form, which can be found at

Mark Emerson

David Broome

Jones Day publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information purposes only and may not be quoted or referred to in any other publication or proceeding without the prior written consent of the Firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our "Contact Us" form, which can be found on our web site at The mailing of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship. The views set forth herein are the personal views of the authors and do not necessarily reflect those of the Firm.