Occupation must be prohibited by law for exemption from empty rates

Occupation must be prohibited by law for exemption from empty rates

In what circumstances will a property owner be exempt from empty rates liability on the basis that it is prohibited by law from occupying or allowing occupation? The High Court decided the owner must show that the law actually prohibits occupation.

Original news

Pall Mall Investments (London) v Gloucester City Council [2014] EWHC 2247 (Admin)

Pall Mall sought exemption from liability to pay empty rates on the ground that their non-occupation of a number of properties was the result of dilapidations, caused at least in part by vandalism. It argued that the state of the properties was such that occupation was prohibited by law.

The High Court had to decide whether, in the absence of:

  • a current applicable statutory provision directly prohibiting occupation, or
  • a valid statutory notice prohibiting occupation

there were sufficient grounds to support a conclusion that Pall Mall was exempted from paying empty rates on the basis that it was prohibited by law from occupying the properties, or allowing them to be occupied.

Pall Mall argued that they were exempt on this basis as:

  • the properties were constructed as offices and were in disrepair, and
  • a surveyor's evidence confirmed that occupation of the properties for office use would not comply with health and safety legislation

What is the law in this area?

Local Government Finance Act 1988, s 45

Unoccupied commercial property in England and Wales is liable for full business rates following expiration of a concessionary period - six months for factories and warehouses, three months for everything else. Unless the property can be rapidly relet, or unless one of the statutory exceptions applies, this is likely to result in a direct and irrecoverable charge to the landlord. The statutory exceptions include where the owner is prohibited by law from occupying the property or allowing it to be occupied.

What did the court decide?

The court decided th

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About the author:
Joanna is a commercial property specialist. Prior to joining the LexisPSL Property team, she was a transactional lawyer. She qualified in 1995 at Shoosmiths and subsequently worked at Nabarro, Charles Russell, Bircham Dyson Bell and Pemberton Greenish. She has wide-ranging experience of all non-contentious property transactions, with a particular emphasis on landlord and tenant work.