Wi-fi lettings to charities — liability for business rates
A landlord of an empty property may find himself or herself having to pay business rates. Initially, a landlord is entitled to an exemption from rates for three months for a shop or office or six months for industrial premises. If at the end of that period the landlord has still not found a tenant, it then must pay business rates.
To avoid this, some landlords have entered into short lettings to tenants to allow the landlord to reduce its liability to pay rates. During the tenancy, the tenant pays the business rates. At the end of it, the tenant gives up occupation. At that stage, the landlord may find himself or herself once again with an empty property. However, if the tenancy has lasted for a minimum of six weeks, the landlord can claim a further exemption period of three or six months. Landlords are therefore keen to encourage a tenant to take a short-term letting. The obligations on the tenant are usually minimal, with the rent often a nominal £1 and the landlord paying a premium to the tenant to induce it to take the letting. The landlord’s concern is not to obtain income from the letting but to use it to trigger a new exemption period from payment of business rates…
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