AT a time of challenging economic conditions, clearly all opportunities to avoid or reduce the empty rates cost must be taken, says Steve Turton of BNP Paribas Real Estate

THERE are different ways to minimise the additional cost and it’s essential to make sure you’re aware of the potential opportunities for complete avoidance or cost minimisation.

Empty rates can be charged only if the property is in the rating list. So, deleting an entry or postponing entry of new buildings will bring savings.

Buildings not capable of occupation should not be in the list. Constructive vandalism, such as removal of roofs from industrial buildings, a practice common in the 1980s, would achieve such a result.

In anticipation of constructive vandalism, the Government has adopted a ‘wait and see’ approach with law possibly being introduced as a deterrent.

In relation to new buildings, again assessment and so liability can prima facie be frustrated by not completing the property – the floor could be left unlaid or key elements omitted.

Lurking in the background are the powers of local billing authorities to serve completion notices, which effectively assume completion for rating purposes. But this is an option to explore which may at least buy time.

Buildings will naturally reach the end of their economic life when they become obsolete. In these cases an argument can be mounted that “no demand equals no value” and deletion of a rating list entry justified.

Typically this argument will succeed with specialist industrial premises, but may apply equally in other cases where demand is limited and alternatives have been provided.

Currently there are no empty rates charged on properties comprising wholly land, such as car parks or sports fields. But there is confusion on where properties with a large proportion of land stand. To date no guidance has been offered by billing authorities and indeed no legal precedent exists. This, it is expected, is an area where the definition will be stretched and challenged in the courts.

As a final resort it is always worth reviewing rateable value assessments with subsequent appeal action, if necessary, to reduce liability. This will be particularly relevant for vacant industrial properties which may not have been subject to scrutiny for some time. Assessment challenge will also be significant for properties marginally above the thresholds for empty rates – £2,200 rateable value for 08/09 and £15,000 for 09/10.

Apart from demolition there is no panacea for the predicament of many owners. As always, the best tactic is to seek professional advice.