A simple clause added into a business property lease will help landlords receive their entitlement to rates relief in the event that their tenant leaves the premises before the end of the term, according to Vertex Law.
When leasing business space, the common position is to include a provision requiring the tenant to pay all rates and taxes imposed on the property for the duration of the lease. Under non-domestic building regulations, occupiers of business premises are entitled to 100 per cent property rates relief if the rented building is empty and unoccupied.
This relief, available for a maximum period of three months per year, attaches to the business premises rather than the individual or company receiving the rates break. As such, it is not permitted for both the tenant and landlord to each claim three months’ relief.
Consequently, when a lease expires a landlord may only claim empty property rates relief for the remainder of the three-month relief period, if any.
Molly Blake, solicitor at Vertex Law, based in Kings Hill, said: “Due to the current state of the economy, some landlords are struggling to rent their commercial spaces and their difficulties can be intensified by the liability to pay business rates on empty properties.
“It is therefore advisable now more than ever for landlords to include an additional provision within a lease requiring the tenant to compensate the landlord for any empty property relief that the tenant may receive. This way, if a tenant successfully claims empty property rates relief before the expiry of the lease, they will have to reimburse the landlord for any rates that the landlord may subsequently have to pay at the end of the term.
“The inclusion of this clause guarantees that the landlord will benefit from the full three months’ rates relief should they require it.”
If you would like to discuss the requirements in more detail, or would like any other advice in relation to business leases, please contact a member of the Vertex Law Real Estate team on 01732 224000 or by email to property@vertexlaw.co.uk.
For more information on Vertex Law, visit www.vertexlaw.co.uk.