February 04, 2011
Ever since the previous government introduced laws requiring landlords to pay tax on empty industrial, office and retail premises, in 2008, the number of charity shops taking short term leases of rented premises has increased.
This is because charities are subject to an 80% relief from business rates whilst in occupation and a total relief from empty building rates. So by having charities as tenants, landlords can avoid having to pay the empty building tax. A landlord whose premises have been occupied for between six and eight weeks can claim up to six months’ rate relief when it is empty. As further inducement, landlords often make donations to their charitable tenants, which can be offset against the 20% of tax payable.
There may be more demand for such occupation after April, when the government will increase the scope of the tax to cover small buildings with a rateable value of less than £18,000, which are currently exempt.
Anther option open to landlords finding themselves liable for empty properties is to occupy the premises themselves for periods of six weeks or more, for storage or other purposes, provided that the occupation is genuine and continuous. They may also wish to consider keeping insolvent tenants in occupation since companies in administration are exempt from rates.
Further advice can be obtained from a property solicitor.
