Business Rates for Commercial Landlords

Business rates are the silent killer of marginal commercial deals: a single empty unit can cost you GBP 3,000-15,000 per year with no rent coming in.

1. What business rates are and who pays

Business rates are a tax on non-domestic property, set under the Local Government Finance Act 1988 and related Non-Domestic Rating regulations.

The Valuation Office Agency (VOA) sets a rateable value (RV) for each property, broadly the annual market rent at a valuation date, and your council applies a multiplier (pence in the pound) to that RV to generate the bill.

In occupation, the tenant normally pays. When the property is empty, you pay after the initial empty-rate relief period unless a specific exemption applies.

Key landlord mindset: treat rates as a core line in your cashflow alongside mortgage interest and insurance, not an afterthought.

2. Rateable value, revaluation, check and challenge

How RV is set and 2023 / 2026 revaluations

RV is based on the open-market annual rent the property could have been let for at a specific valuation date, assuming usual lease terms.

The 2023 rating list in England and Wales is based on rental values at 1 April 2021.

From 1 April 2026, there is a new revaluation: rateable values are reset based on rental levels around April 2024, and the 2023 list closes on 31 March 2026.

You can already look up both your current and future RV on GOV.UK and get an estimate of bills.

Checking and challenging

On the 2023 list (and similarly going forward) you use VOA's Check, Challenge, Appeal route:

Check: Verify property details (area, use, layout) on the VOA system.

Challenge: If you think RV is too high, submit a challenge with rental evidence.

Appeal: If you still disagree with VOA's decision, appeal to the Valuation Tribunal.

Why it matters:

A GBP 5,000 RV reduction at a ~48p multiplier is worth about GBP 2,400 per year off the bill.

Over a 5-year list that is GBP 12,000, which is the difference between "nice yield on paper" and "why did I buy this unit?"

Forum mistake: "Rates are what they are, you cannot do anything." Reality: if your RV does not reflect actual rents at the valuation date, you can challenge, but you need evidence and you have time limits.

3. The multipliers: current 2026/27 figures

Business rates are calculated as:

Rates bill = Rateable Value x Multiplier

For 2026/27 in England, government notifications and sector commentary suggest the following proposed multipliers (pence in the pound):

Scotland and Wales have their own multipliers and reliefs, so for PropertyKiln you should signpost that your examples are England unless stated otherwise.

Retail, hospitality and leisure:

The temporary "Retail, Hospitality and Leisure Relief" (RHL relief) that heavily discounted bills to 2025/26 ends 31 March 2026 and is replaced with these permanently lower multipliers for qualifying RHL properties under GBP 500,000 RV.

4. Empty property rates and the "six-week trick"

Standard empty property rules

Under the Non-Domestic Rating (Unoccupied Property) Regulations and standard council practice:

For most commercial property (shops, offices etc):

3 months 100% relief from the date it becomes empty.

After that, full rates (100% liability).

For qualifying industrial premises (warehouses, factories):

6 months 100% relief.

Then full rates.

Further exemptions (varies slightly by country and council):

Listed buildings: usually exempt while empty.

Properties with RV under GBP 2,900: often fully exempt while empty in England.

Charity or community amateur sports club ownership, where next use will be mostly charitable or as a sports club.

As at 2024, England tightened the "reset" rules:

To get a new 3- or 6-month free period, the property must be occupied continuously for 13 weeks before becoming empty again (previously 6 weeks).

Changing tenant or owner does not restart the clock by itself.

This kills the old "six-week trick" where people would occupy for a short period just to reset the relief. Now you need a genuine 13-week occupation, which is usually a real short-term let, not some ruse.

What this costs you

Worked example for your content:

Small shop, RV GBP 20,000 in 2026/27.

Standard multiplier (assume 48.0p) gives GBP 9,600 per year full bill.

You get 3 months free when the tenant leaves, then pay 9/12 of GBP 9,600 = GBP 7,200 if it is empty for the rest of the year.

This is why in your PropertyKiln guides you can confidently say:

A single void commercial property typically costs GBP 3,000-15,000 per year in rates alone for most small to mid-size units.

Forum myth: "The six-week occupation trick wipes rates every time." Reality: since 1 April 2024 in England, you need 13 weeks genuine occupation to trigger a fresh relief period.

5. Reliefs: small business, RHL, and other support

Small Business Rate Relief (SBRR) -- England

The government has kept the existing SBRR structure into 2026:

100% relief if RV is GBP 12,000 or less.

Tapered relief between GBP 12,001 and GBP 15,000, with bills rising gradually until full liability at GBP 15,000.

You usually only get SBRR on one property (with limited tolerance for small second properties).

Many small parade shops and local offices will sit in this band, which makes them far more lettable. If SBRR is available, your tenant's rates bill is effectively zero, which is a strong marketing point.

Retail, Hospitality and Leisure (RHL) support

Temporary enhanced RHL relief (up to 75% discounts) runs through to 31 March 2026.

From 1 April 2026, support shifts into the lower multipliers for qualifying RHL properties under GBP 500,000 RV rather than a separate discount.

Other reliefs

Councils can also grant:

Hardship relief or discretionary relief in specific cases.

Rural rate relief and charity relief in narrow circumstances.

Your guide should stress: relief follows the occupier's use and status, not you as landlord. You cannot rely on it for your own empty-property exposure.

6. Your exposure as landlord and how to limit it

Exposure in voids

During voids you are on the hook for:

Business rates after the initial 3- or 6-month relief period.

Service charge shortfalls.

Insurance and basic security.

Realistic ranges for small units:

RV GBP 10,000-15,000: after relief, empty rates GBP 3,000-7,000 per year depending on multiplier and any reliefs.

RV GBP 20,000-30,000: empty rates GBP 7,000-14,000+ per year if no relief, easily GBP 10,000-15,000 in many towns.

That is why commercial landlords obsess about voids: a year empty on even a modest unit can cost you more in rates and service charge than in mortgage interest.

Strategies to reduce empty rates hit

Legitimate strategies that councils accept:

Short-term tenancies / licences:

Let to a genuine occupier for at least 13 weeks to reset the relief period, if that fits the plan.

This might be at a low rent or even a "meanwhile use", but make sure occupation is real (stock, trading, rates registration in their name).

Charitable occupation:

Genuine lets to charities where the main use is charitable can attract 80-100% relief on rates.

Councils and HMRC scrutinise sham arrangements; do not rely on "charity shell" schemes heavily promoted on forums.

Using the property:

If you or a group company genuinely occupy and trade from the property, you are the ratepayer, but you may qualify for SBRR if RV is low.

Marketing and alternative use evidence:

Some councils are more sympathetic on discretionary relief if you can show serious, documented efforts to re-let or repurpose.

Forum mistake: "Just let a mate use it for six weeks and the clock resets." In 2026, councils know this game. Without 13 weeks genuine occupation and evidence of business use, you risk paying the rates anyway and getting dragged into a fraud investigation.

7. Interaction with insurance and uninhabitable property

Your exposure changes if the property is genuinely unusable:

If a property is so badly damaged by an insured event (fire, flood etc) that it cannot be occupied, councils can treat it as not rateable or apply empty relief until it is fit again.

Many commercial landlord insurance policies include loss of rent cover that will pay you rent while the tenant is not paying, and some will also reimburse business rates on an unoccupied but damaged building.

The key for your guide:

Tell your insurer and council immediately when damage happens.

Document the uninhabitable state and repairs.

Check your policy wording: does loss of rent cover rates, and for how long (often 12-36 months)?

8. What forums get wrong about business rates

You will see the same bad takes over and over:

"Tenants always pay the rates."

In occupation, yes, the tenant is usually the liable ratepayer.

As soon as the unit is empty, you are paying after 3 or 6 months unless the RV is tiny or an exemption applies.

"Empty property relief lasts 3 months every time you change tenant."

Changing tenant or owner does not restart relief. The property must be occupied continuously for 13 weeks to earn a new rate-free period in England.

"You cannot do anything about your rateable value."

If your RV is based on historic rent assumptions that are now wrong, you can use Check, Challenge, Appeal with evidence.

"Charity schemes are a safe way to avoid all empty rates."

Councils and courts have clamped down on sham charity occupations. You need genuine charitable use as defined in rating law, not just a logo in the window.

For PropertyKiln, the practical angle that matters is this: when you run numbers on a commercial purchase, plug in at least one full year of void every 5-7 years, with full empty rates at current multipliers. If the deal does not work on that basis, it is too tight for a small landlord.

Legislation tracker, budget coverage, new tools. Free, no spam.

Didn't find what you were looking for?