Empty properties are a nightmare for the average commercial Landlord in this economic climate. I thought I would take the opportunity to write about an important 2012 case, Makro v Nuneaton Council (Makro), concerning empty property rates.
The general rule is that an empty property is exempt from rates for three months. After that, it must start paying full business rates. The period is six months for industrial units. A Tenant can get a further six months once it has occupied the premises for six weeks or more. Makro argued that they were entitled to a further six months exemption by virtue of their occupation of the premises between November 2009 and January 2010. During that time, Makro had stored pallets (containing paperwork) at the premises, which occupied 0.2% of the floorspace. The question boiled down to whether or not they were in sufficient occupation so as to attract a further six months exemption from business rates. It was held that Makro were sufficiently in occupation and were able to benefit from a further six months exemption from rates. It is interesting that Makro used just 0.2% of floor space and gained a saving of £117,000- no small sum.
This decision will undoubtedly provide relief to Landlords who are struggling with business rates on their empty properties. Makro shows, that even a small use of floorspace, can amount to occupation which will then lead to eligibility for another six months exemption from rents. So if Landlords and Tenants want to gain another six months exemption from rates, Makro would appear to suggest that even storage use of the property would satisfy the requirement for occupation.
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