Farming Talk: Headache of rates bill for empty buildings
At a time when the economy is, to say the least, extremely challenging, then depending on your position it may seem grossly unfair that landlords have to pay non-domestic rates on commercial premises where they are unable to find tenants.
The Government has made some concessions, but many landlords are caught by this.
This problem reared its head in the early 1980s recession when a then loophole enabled the tenants to take the roof off appropriate buildings to avoid the rates. This loophole was plugged, but there are still ways in which landlords can look to reduce their potential non-domestic rates bill.
In the case of farms there may be commercial units which are empty old barns and farm buildings in the course of redevelopment for housing, empty commercial units where the tenants have vacated the premises, and there may be premises which are simply not fit for occupation.
Working through this with their accountants, land agents and solicitors, landlords may be able to avoid these rates.
If a lease has been granted to a tenant then it will often provide that the tenant is to pay the rates. Hence, even if the tenant has vacated the premises, they may still be bound by the leasehold/tenancy and liable for the rates. Landlords should be careful about not inadvertently accepting a surrender of the tenancy too quickly.
If barns and/or farm buildings are in the process of conversion and are not capable of beneficial occupation then the owners are exempt from paying their rates.
Whether a building is 'unfinished' is arguable and council planners can serve a completion notice if they consider the building is deemed to be within three months of practical completion so as to have the premises valued for rating.
Another possibility is to have the building deemed not fit for occupation.
This would remove the property from the rating list but there can be considerable problems with future re-registration.
Mains services have to be taken away and there is always a danger of losing existing planning permission.
Farmland and farm buildings are exempt from non-domestic rates.
Hence on an intermittent basis farmers can think about storing farm goods and machinery in the buildings or using them for some other agricultural purpose. This would have to be a proper farming use, not just a token exercise.
There may well be other ways of alleviating this problem. Each landlord has different circumstances and the local authority is likely to carefully scrutinise each case.
Steven Corfield is a partner and agricultural specialist at Shropshire law firm FBC Manby Bowdler LLP
