Landlords of empty properties breathe sigh of relief. Landlords using short term lettings to help avoid empty business rates will be relieved by the decision in R (Principled Offsite Logistics Ltd) v Trafford Council and others  EWHC 1687 (Admin) (6 July 2018).
Here, the landlord had entered into an agreement with the tenant whereby the tenant took a lease for storage purposes at a peppercorn rent. The landlord agreed to pay the tenant a fee of 20% of the rates saved. It would appear that this was not a one-off – the business of the tenant company was precisely to enter into such leases with landlords.
The arrangement takes advantage of the rule the rating legislation provides that, where a landlord has claimed empty shops/offices rates relief (currently 100% for three months), as long as the property is reoccupied for at least six weeks, the clock is reset and the landlord can make another claim once the premises become vacant again.
Trafford Council tried to argue that the mere presence of the tenant’s goods to try and mitigate the landlord’s rates liability should not be classed as genuine occupation for the purposes of the legislation, however the High Court has disagreed, stating that as long as all the other requirements of occupation are satisfied (i.e. exclusive use) there was not a requirement for separate commercial reward for the tenant – the fact they would gain through the arrangement with the landlord was sufficient.