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Empty rates dilemma

publication date: Nov 9, 2011
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Landlords are being left with the unenviable decision of whether to remove failing tenants from their premises or allow them to stay due to the hike in empty property rates imposed by the Government in April, says Ellen James, associate at Bircham Dyson Bell LLP. “It’s a dreadful trade off to have to make and it ultimately puts a failing tenant in the driving seat. It may be cheaper to simply allow a tenant to stay rent free, than to pay the high empty property rates that have been imposed on landlords since April this year.

Properties are difficult to re-rent and sell presently, and the three months and six months grace for retail and industrial premises respectively doesn’t leave much room for manoeuvre. “In some extreme cases, drastic rates mitigation tactics are being considered to the point where landlords are considering pulling down their premises to avoid paying taxes affecting less desirable areas of Britain’s cities.

“Landlords are simply less willing to take back the keys to properties because they can’t fill it again, can’t sell it and would rather not destroy their premises to avoid the tax – and so failing tenants are being seen as the lesser of all evils. It’s an absurd situation and leaves the landlord without any bargaining power.

“One alternative is to allow a charity which receives 80 per cent rates relief to occupy premises; butthere simply aren’t enough of those to go around.”