Mayor and Commonality and Citizens of the City of London v 48th Street Holding Ltd & Anor [2025] EWHC 1130 (KB)
The High Court has held that an “intermittent occupation” rates mitigation scheme is effective to generate repeated 3 month periods of empty rates relief under the relevant regulations which were the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008. Those have since been amended by the Non Domestic Rating (Unoccupied Property)(England)(Amendment) Regulations 2024 so that the period of continuous occupation required is now 13 weeks (instead of 6 weeks).
The Scheme
The scheme was simple.
- When the 3 month exemption from empty rates liability expired 48SHL the leaseholder of the property (an office building in America Square) granted POLL( the rates scheme operator) a lease and at the same time exercised a break clause terminating it after 6 weeks.
- On the grant of the lease POLL put some boxes and contents in the property for 6 weeks. That was said to constitute rateable “occupation”.
- The boxes were removed at the end of the 6 week period.
- On the basis the property was “occupied” during the 6 week period 48SHL claimed a further 3 month exemption.
- The cycle repeated until the property was let on a more permanent basis.
The Issue
The key issue was whether “… on a purposive construction of the legislation the placing of boxes and their contents in their premises for 6 weeks means that the premises are “occupied” within the meaning of Regulation 5 of the 2008 regulations for that 6 week period thus avoiding regulation 5 and triggering a fresh 3 month period of exemption.”
The Arguments
COL’s case was (i) that the Ramsay principle applied and on a proper application of that principle the scheme failed because the “occupation” was generated solely to avoid the liability which the legislation imposed and served no business purpose (ii) on a purposive interpretation “occupied” in section 65(2) and regulation 5 is only occupation which is consistent with the statutory purpose and this scheme was not consistent with that purpose which was to bring empty property back into occupation and (iii) there must be some “benefit” to the occupier other than the rate mitigation effect of it in order to constitute “occupation”.
POLLs case was that (I) COL’s arguments based on the Ramsay principle rested on an overly simplistic reading of the purpose of the empty rates regime- it is not clear that all intermittent occupation schemes are contrary to Parliament’s purpose (ii) the proper interpretation of the legislation is informed by the 2024 Amendment Regulations which increased the 6 week period to 13 weeks- the SoS had actively considered changing the conditions for “occupation” but declined to do so and (iii) the meaning of “occupation” was set out in established case law which there was no reason to conclude Parliament had intended to change in the 2008 or 2024 Regulations.
The Decision
The Judge decided (1) COL’s arguments based on the application of the Ramsay principle would not succeed as he felt it was not clear that intermittent occupation schemes are inconsistent with the statutory purpose -that purpose he said was to balance the objectives of bringing properties back into occupation with supporting landlords with empty properties and making the system practical to apply (ii) the Judge agreed with POLL that for there to be rateable occupation there was no need for any benefit of the occupation other than rates mitigation which it achieved and (iii) to decide in COL’s favour on this point would involve reaching a different conclusion than the same court in POLL v Trafford which the Judge could not do unless he was convinced that decision was wrong and COL’s arguments “ did not come close” to persuading him that was the case.
Summary
The judgement will be welcome news to landlords looking to mitigate the impact of rates on properties they are struggling to re-let.
