Landlords and occupiers of office and retail properties may be unaware that they could still avoid business rates tax on empty buildings following the lowering of the exemption threshold, according to Paul Giness, a consultant with cost, purchase and supply management consultancy, Expense Reduction Analysts.

Up to the beginning of April those properties with a rateable value of less than £18,000 did not have to pay business rates on empty property. However this exemption was reduced with effect from 1st April 2011 to just £2,600, albeit as before retail and office properties above this limit should still benefit from 100% relief for the first 3 months of being empty and 6 months relief for industrial premises.

Whilst it is estimated that the government’s reform of empty property rates will pull in an extra £400m a year to reduce the nation’s deficit, it means that many more property owners and tenants will now feel the pinch as they have to start paying empty property rates for buildings with rateable values of greater than £2,600.

However Giness points out that there is some relief that may have gone unnoticed when he says: “The Government is providing eligible small businesses who occupy a property with a rateable value of less than £6,000 with a rate holiday period and reduced tiered rates for rateable values between £6,000-£12,000 up until October 2012.

“Landlords and tenants should therefore look at their empty property space and see if they can create ‘parcels’ of accommodation that fall under a rateable value of £12,000 which can be let out on a short term agreement to small businesses. The main stipulation for splitting property in this way is that it is capable of separate occupation. However, if you are unclear about the merits, professional advice should always be sought.

“Whilst there may be some costs associated with making structural changes to meet the criteria for separate occupation, landlords and tenants could save up to £2,500 on every empty property let over the next year to October 2012 with a rateable value of less than £6,000. They will also be able to gain further discounts on empty properties with rateable values between £6,000-£12,000.

Giness concludes: “Landlords and tenants looking to avoid paying business rates under £6,000 rateable value on empty properties in this way should also be able to find willing occupiers as the business rates will not be passed onto them, assuming they qualify for the relief, making the let more competitive.

“This could appeal to landlords, managed service office providers and tenants of office space as well as independent retail chains, who may have empty property space as a consequence of the harsh economic climate.”