Empty Property Rates: A Complete UK Guide

When a commercial property becomes empty, you do not pay business rates straight away — but the relief is time-limited, and after it runs out the bill can be substantial. For most empty properties there is a three-month rates-free period (six months for industrial premises such as factories, workshops and warehouses), after which a full 100% empty-property rates charge becomes payable by the person entitled to possession. Some empty properties are exempt for longer or entirely, and since 1 April 2024 the rules have tightened: a property must now be reoccupied for at least 13 weeks before a fresh rates-free period can apply. This guide explains exactly how empty property rates work, who pays, the exemptions, the 2024 anti-avoidance change, and the legitimate ways to reduce the cost of empty space.

What empty property rates are

Business rates are normally a tax on the occupation of non-domestic property, but they do not stop entirely when a property is empty. Instead, after an initial rates-free period, an empty property rate (also called unoccupied property rating) becomes payable. The purpose is to discourage owners from leaving commercial property standing empty and to encourage them to bring it back into use. For businesses and landlords, empty rates are a real and often unexpected cost — surplus space following a move, a unit between tenants, or premises awaiting sale or redevelopment can all generate a full rates bill once the void period ends. Understanding the rules is the first step to managing that cost.

The rates-free void periods

When a property first becomes empty, there is an initial period during which no rates are charged:

The void period runs from the date the property becomes empty. It is a one-off allowance for that period of emptiness — once it expires, the full charge applies for as long as the property remains unoccupied, unless an exemption applies. Knowing exactly when your void period ends is essential to budgeting and to deciding what to do with the space.

What happens after the void period

Once the three- or six-month rates-free period ends, the property is charged at the full 100% of the business-rates bill it would attract if occupied — there is no general reduced empty rate. That can come as a shock: an empty unit with a £30,000 rateable value will, after the void period, attract the same rates as if a business were trading there. The charge continues for the whole time the property stays empty, which is why empty rates are such an important cost to plan for when premises fall vacant. The only ways to stop or reduce the charge are to bring the property back into genuine use, to qualify for an exemption, or to use one of the legitimate reduction routes covered below.

Who pays empty property rates?

Empty rates are payable by the person entitled to possession of the property — generally the owner if it is owner-occupied or vacant, or the leaseholder if the property is let and the lease continues even though the tenant has moved out. This last point catches many businesses out: if you hold a lease on premises you no longer occupy, you can remain liable for the empty rates until the lease ends, is assigned, or the property is sublet. That is why managing surplus leased space — by subletting, assigning or surrendering the lease — is as much about empty rates as about rent. Always check who is entitled to possession, because that is who the council will bill.

Exemptions from empty rates

Some empty properties are exempt from empty rates, either indefinitely or in particular circumstances:

If your empty property might fall within one of these, it is worth checking with the council, because the exemptions can remove the charge entirely. Note that exemptions are specific and evidenced, not automatic — you generally need to claim and substantiate them.

The 2024 reset-period change

A significant anti-avoidance change took effect on 1 April 2024. Previously, a property only had to be reoccupied for six weeks before a fresh three- or six-month rates-free period could be claimed. From April 2024, that “reset period” was extended to 13 weeks: a property must now be in genuine occupation for at least 13 continuous weeks before a new empty-rates relief period can apply (and rates are payable during that occupation). The change was aimed squarely at “box-shifting” schemes, where a property was briefly occupied — sometimes only nominally — to trigger a new rates-free period and avoid empty rates. By tripling the required occupation period, the rules make those schemes far harder to operate. For genuine businesses, the practical effect is that short reoccupation no longer resets the clock.

Empty-rates avoidance schemes and the crackdown

Empty property rates have long attracted avoidance schemes, and the law has steadily tightened against them. Tactics such as briefly placing minimal goods in a unit to claim occupation, repeated short lets designed only to trigger fresh void periods, or artificial charitable occupation have all been challenged by councils and the courts. The 2024 extension of the reset period to 13 weeks is the latest step. The clear message is that genuine reliefs and exemptions are available and should be used, but artificial schemes designed only to dodge empty rates are increasingly ineffective and risky — they can be challenged, unwound, and leave the business with backdated bills. The sustainable approach is to bring property back into real use, or to rely on the genuine exemptions and reduction routes the law provides.

How to reduce empty rates legitimately

There are several lawful ways to cut the cost of empty space:

• Relet or sublet the property so it is genuinely occupied and rates pass to the occupier.
• Assign or surrender a lease on space you no longer need, so you are no longer entitled to possession.
• Use partly occupied property relief (Section 44A) where only part of a property is in use.
• Check the rateable value — if it is below £2,900 the property is exempt, and an over-stated value may be challengeable.
• Claim any exemption — listed building, charitable next use, or insolvency — that genuinely applies.
• Consider the property’s future — redevelopment or a change that removes it from the rating list may end the charge.

Each of these is legitimate and evidence-based, in contrast to artificial occupation schemes. The right route depends on your plans for the property and how long it is likely to stay empty.

Partly occupied property relief (Section 44A)

If only part of a property is occupied and the rest is genuinely empty — for example, you have consolidated into one floor of a building you lease — you may be able to apply to the council for partly occupied property relief under Section 44A of the Local Government Finance Act 1988. The council can ask the Valuation Office Agency to apportion the rateable value between the occupied and unoccupied parts, so that the empty part is treated under the empty-rates rules (including its own void period) rather than charged at the full occupied rate. This relief is discretionary and intended for temporary situations, so it must be applied for and supported with evidence of which parts are empty. For businesses carrying surplus space within a larger property, it can produce meaningful savings while the position is resolved.

The leaseholder’s empty-rates trap

One of the most common and costly surprises is discovering that vacating premises does not end your rates liability. If you hold a lease and move out but the lease continues, you remain the person entitled to possession — and therefore liable for the full empty rates once any void period ends, on top of the rent you are still paying. This “double cost” of rent plus empty rates on space you no longer use can be significant, and it persists until you do something about the lease. The practical answers are to sublet the space (passing occupation and rates to a sub-tenant), assign the lease to a new tenant, or negotiate a surrender with the landlord. Each has its own legal and commercial considerations, but all of them address the empty-rates liability at its source. The key is to act early: the longer surplus leased space sits empty, the more rent and rates accumulate. Reviewing your lease portfolio for space you no longer need is one of the most effective ways to cut wasted property cost.

Empty rates, property value and investment

Empty rates also affect how commercial property is valued and traded. A building with high empty-rates exposure — a large unit likely to sit vacant, or one between tenants — carries a holding cost that investors and buyers factor into the price they will pay. For landlords, persistent voids plus full empty rates erode the net return on a property and can make reletting at a sensible rent more urgent. For buyers, the empty-rates position of a property under offer is part of due diligence: how long has it been empty, when does or did the void period end, and is any exemption available. Understanding the empty-rates liability attached to a property is therefore not just an operating-cost question but part of its investment profile. Anyone buying, selling or holding commercial property should treat the empty-rates position as a real factor in value, not an afterthought that only surfaces when the first full bill arrives.

Worked example: an office between tenants

A landlord’s office unit, with a rateable value of £40,000, falls vacant when a tenant leaves. For the first three months no rates are payable. After that, the full empty-property charge applies: £40,000 × 0.432 (the 2026/27 small business multiplier) = £17,280 a year for as long as it stays empty. The landlord cannot simply place a few boxes in the unit for a fortnight to reset the clock — since April 2024, genuine occupation of 13 weeks is needed before a new void period applies. The realistic options are to relet the unit, to check whether any exemption applies, or, if part of a larger building, to seek partly occupied relief. The example shows why empty rates should be planned for the moment premises fall vacant, not after the void period has quietly expired.

Why empty property rates exist

It can feel unfair to pay tax on a property that earns nothing, so it helps to understand the policy behind empty rates. The charge is deliberate: it exists to discourage owners from leaving commercial property standing idle and to nudge them towards bringing it back into productive use — reletting it, redeveloping it, or selling it to someone who will. From a town-centre and economic-policy point of view, long-term empty units are seen as a problem, and empty rates are one of the levers used to address it. That policy purpose also explains the anti-avoidance rules: because the charge is meant to encourage genuine reuse, schemes that create only the appearance of occupation defeat the point, and the law has been tightened repeatedly to close them. For owners and businesses, the practical takeaway is that the most reliable way to deal with empty rates is the one the policy intends — get the property back into real use.

Industrial property and the six-month rule

Industrial premises get a more generous void period than other property: six months rates-free rather than three, reflecting the fact that factories, workshops and warehouses can take longer to relet. The category covers premises used for manufacturing, processing, repair, or the storage and distribution of goods. After the six months, the full empty rate applies in the same way as for other property. The distinction matters because it doubles the breathing space for industrial landlords and occupiers, and because borderline cases — a hybrid unit used partly for storage and partly as a trade counter, for example — can fall on either side of the line. If your empty property has an industrial character, check whether the six-month period applies, because it can make a substantial difference to when the charge begins.

Empty rates when selling or redeveloping

Empty rates are a particular issue when a property is between uses — awaiting sale, refurbishment or redevelopment. While the property sits empty beyond its void period, the full charge accrues, which can add up over a long sale or build programme. There are legitimate ways this can change: if a property is so altered by redevelopment that it is taken out of the rating list by the Valuation Office Agency (because it is no longer a usable hereditament), the empty-rates charge can cease for that period; and a property genuinely incapable of beneficial occupation may be reassessed. These are technical, evidence-based positions, not avoidance tactics, and they need careful handling with the Valuation Office Agency. For owners planning a redevelopment, factoring empty rates into the project budget — and taking advice on the rating position during the works — can avoid an unwelcome running cost.

An empty-property action checklist

When a commercial property falls empty, work through these steps promptly:

• Note the void end date — three months from vacancy (six for industrial) — and diarise it.
• Check for an exemption — listed building, rateable value under £2,900, charitable next use, or insolvency.
• Confirm who is liable — owner or leaseholder entitled to possession.
• Pursue reletting or subletting early, so rates pass to a genuine occupier.
• Consider partly occupied relief if only part of a larger property is empty.
• Check the rateable value for accuracy, and challenge it if overstated.
• Tell the council promptly about the vacancy and any change, as reliefs run from notification.

Acting in the first weeks of a vacancy — rather than when the first full bill lands — is what keeps empty rates under control.

Common mistakes to avoid

• Forgetting the void period ends. The full charge starts automatically after three (or six) months.
• Assuming a 50% empty rate. It is a full 100% charge after the void period.
• Thinking a brief reoccupation resets the clock. Since April 2024 you need 13 continuous weeks.
• Staying liable on a lease you have vacated. Sublet, assign or surrender to pass on the liability.
• Missing an exemption. Listed buildings, sub-£2,900 rateable values and insolvency cases can be exempt.
• Relying on an avoidance scheme. Artificial occupation can be challenged and unwound.

London businesses: a quick note

Empty rates bite hard in London because rateable values are high — a vacant London office or shop can attract a five- or six-figure annual empty-rates charge once the void period ends. With hybrid working leaving many London businesses holding surplus space, and leases that keep tenants liable after they vacate, empty rates have become a significant cost to manage. For London occupiers and landlords, the priorities are to plan for the void period the moment space falls empty, to use genuine reliefs and partly occupied relief where space is only partly used, and to deal with surplus leased space promptly rather than carrying an avoidable bill.

What we see in practice

Empty-rates planning is mostly about the calendar. Empty commercial premises get up to three months rates-free (six months for industrial and warehouse property) under section 45 of the Local Government Finance Act 1988; after that, full business rates are payable unless an exemption applies. Owners often assume the clock restarts the moment a tenant leaves — in practice it runs from when the property first becomes empty, so by completion of a sale or letting much of the free period may already be gone.

The change that catches landlords out is the reset period. From 1 April 2024 a property must be occupied for at least 13 continuous weeks — up from six — before a fresh empty-property relief period can be claimed, which closes down the old tactic of brief reoccupation (“box-shifting”) to refresh the relief. We model the void timeline before a unit falls empty, because small timing decisions change the rates bill materially.

How Hayhills can help

Managing the cost of empty commercial property is a commercial matter, not a reserved legal activity, so Hayhills can help you directly: working out when your void period ends and what the charge will be, checking whether any exemption applies, advising on partly occupied property relief, and helping you deal with surplus leased space through subletting, assignment or surrender so you are no longer liable. Where the formal property work requires it, we work alongside and introduce a regulated conveyancer or surveyor. See our guide to reducing business rates for the wider picture, or speak to Hayhills today.

This article is for general information only and does not constitute legal or accountancy advice. Hayhills Limited, trading as Hayhills Legal Advisory, provides non-reserved legal advisory services. Always check current requirements at GOV.UK.

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