THE abolition of rate relief on vacant properties at the start of the downturn last year could not have come at a worse time for commercial landlords.

Not only do many have properties lying empty for long periods, they now have to pay rates on them.

Some have chosen to demolish buildings to avoid paying, but this is not an option where the property is valuable, costly to rebuild or part of a wider estate.

Landlords in this situation should now consider mitigation strategies to safeguard their business.

There are two options. If a vacant property is occupied for six weeks and rates are paid for that period, then if it is subsequently vacated the owner can claim a further three months’ rates relief, or six months for industrial properties.

In theory, this cycle of short-term occupation and a period of rates relief could continue indefinitely.

The occupation can be by the property owner, but it is better if it is a third party. We recommend putting in place a lease for six weeks, plus one day, to exclude any security of tenure.

It is advisable that some activity, for example, storage, be carried out or the rating authorities may class part of it as unoccupied.

While this method has not been challenged yet by rating authorities, there is no guarantee that it will not be in future, so any benefit should be treated as a windfall which may potentially be clawed back.

Another option is to let a property to charity. Provided it is used for charitable purposes, the charity is entitled to 80% rate relief by law, with a further 20% reduction at the discretion of the rating authority.

If it then becomes vacant, it will be zero-rated if it appears that its subsequent use will be mainly charitable.

Mitigation strategies are well worth considering for hard-pressed property owners; however, it is important to ensure that any arrangement follows the proper processes and is accurately recorded.