Jennifer Chappell, senior associate at Bircham Dyson Bell LLP,
believes that the decision in the case of Makro Properties Limited
v Nuneaton and Bedworth Borough Council has presented landlords
with a window of opportunity in terms of avoiding paying
business rates on vacant properties, until such a time as
legislation catches up and the loophole is closed.
"Landlords are required to pay business rates on empty
properties after they are vacant for three months, or six months on
industrial warehousing units. However, the rule allows a further
period of three or six months relief following the property being
occupied continuously for six weeks . This is where a loophole has
been exposed," explains Jennifer.
"Makro ceased to occupy a warehouse and surrendered its
lease, but entered into a licence with its former landlord allowing
it to store 16 pallets of archived documents in the property, using
just 0.2% of the floor area for a two month period. It then argued
that this occupation entitled it to a further six month exemption
from business rates - and the High Court agreed."
"The Council argued that occupation by virtue of the
pallets was not sufficient because it was 'de-minimus'
given the size of the unit. Makro sought to rely on previous case
law where councils had been successful in arguing that even
de-minimus occupation was sufficient and triggered a requirement
for business rates to be paid."
In the current economic climate landlords are struggling against
maintaining an increasing number of vacant units. The change of law
back in April 2008 which required landlords to pay business rates
on empty properties has put further financial pressure upon them.
The empty rates legislation has been very unwelcome.
The Makro decision will be welcomed by property owners as it
unwittingly creates an empty rates relief avoidance scheme. A
short term letting of six weeks for storage purposes was held to be
a rateable occupation and successfully triggered a fresh period of
empty rates relief,. There appears to be no limit on how many times
the rating relief can be triggered.
Jennifer concludes: "If the outcome of this case is
seen as unacceptable, it's for the legislature to determine
that further reform is needed. In the meantime, there is a window
of opportunity for disgruntled landlords to effectively manipulate
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The Court of Appeal has recently refused to amend a legal charge registered at the Land Registry, even though it would have given effect to the parties’ common intention (which had been mistakenly missed out of the charge).
With the current economic climate, landlords are increasingly finding that they have vacant units which they will often wish to secure occupation of on a short term basis, while they market the unit for a longer term let.
Following Judge Pelling QC’s decision in Leisure Norwich (2) Limited & Others v Luminar Lava Ignite Limited (in administration) & Others  EWHC 951 (Ch) (reported in the June 2012 edition of BDB’s Property & Insolvency Bulletin), rent which is incurred prior to a tenant going into administration must be proved like any other pre-administration debt and cannot be paid as an expense of the administration.
The FIDIC Contracts Committee has issued a Guidance Note dealing with the powers of, effect of and the enforcement of Dispute Adjudication Board (DAB) decisions.
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