May 2025
On 15 May 2025, the High Court issued a landmark ruling in the case of The Mayor and Commonality and Citizens of the City of London v 48th Street Holding Limited and Principled Offsite Logistics Limited, which addressed a critical issue in the commercial property sector: the mitigation of empty property business rates. The case involved the practices of Principled Offsite Logistics Limited (POLL), a company providing a service very similar to that of Vacant Space Management (VSM), which helps property owners manage the financial burden of empty property rates. The judgment provides important insight into the legality of mitigation schemes and has broader implications for businesses in this sector.
The dispute arose from the City of London Corporation’s challenge to POLL’s empty property rates mitigation strategy. POLL had been employing a method in which vacant commercial properties were temporarily “occupied” by placing boxes inside the space. This action allowed property owners to claim a three-month exemption from paying business rates on the unoccupied property. The City of London Corporation (COL) argued that this was a loophole designed to circumvent the spirit of the law, which requires properties to be genuinely occupied to qualify for exemptions from rates. COL contended that the occupation of the space by boxes was a purely artificial arrangement, which did not constitute genuine use or occupation of the property, and was instead a tactic designed to avoid paying business rates.
The City of London’s legal argument was based on the premise that the use of boxes to temporarily occupy a vacant property should not meet the legal requirements for “occupation” under the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008. COL stressed that the intention behind the exemption was to encourage legitimate, long-term use of properties, not to facilitate temporary measures that were purely designed to trigger the exemption and reduce rates. COL also pointed out that the property was not being used for any business purpose, nor was it being rented out or maintained for operational use. In their view, the entire arrangement was simply a means of evading rates through what they described as a “sham occupation.”
COL further argued that, under the legislation, the definition of “occupation” should imply more substantial use, such as commercial or residential activity, that contributed meaningfully to the property’s purpose. By focusing on the placement of boxes, POLL was, in their view, exploiting a technicality and undermining the intent of the property rating system.
The High Court rejected COL’s arguments and ruled in favor of POLL, affirming that the placement of boxes in vacant properties did indeed constitute “occupation” under the regulations. The court referenced the case of R (POLL) v Trafford Council (2018), where it was established that temporary occupation aimed at mitigating rates could still qualify as genuine occupation, provided it served a legitimate purpose. The court found that the arrangement offered a valid, commercial purpose for landlords by preventing the property from remaining empty and thus liable for business rates.
The judgment further emphasized that the regulations governing empty property rates are primarily concerned with the effective use or management of unoccupied property, rather than the precise nature of the activity taking place. The court agreed with POLL’s argument that the service provided a legitimate function, as it helped landlords manage the financial burden of unoccupied properties and contributed to the reduction of vacancies in the commercial property market.
The judge also noted that while the use of boxes might seem temporary, it still fulfilled the legal criteria for “occupation” because it was part of a business arrangement that facilitated the lawful avoidance of rates during periods of vacancy. Thus, the court ruled that there was no abuse of the system and that the practice of temporary occupation, as employed by POLL, was compliant with the regulations.
For companies like Vacant Space Management, which offer similar services to POLL, the ruling is a significant one. It provides greater clarity on the legality of empty property rates mitigation schemes and reinforces the legitimacy of such strategies when implemented properly. However, it also raises the potential for future legislative scrutiny, as local authorities may seek to introduce tighter regulations or clearer definitions of what constitutes genuine “occupation.”
At VSM, we are committed to ensuring that our services remain fully compliant with all current legislation. While this judgment confirms the legitimacy of certain mitigation strategies, it also highlights the need for continued vigilance in monitoring the evolving legal landscape. As part of our commitment to delivering the best possible advice to our client landlords, we will closely monitor any future developments or challenges in the area of empty property rates. We will continue to provide up-to-date information on any changes to the law or emerging case law, ensuring that our clients can make informed decisions and maintain the efficacy of their property management strategies.
In conclusion, the High Court’s ruling validates the current approach to empty property rates mitigation but also signals that the landscape could shift with future legal challenges or regulatory updates. As a leading provider of property rates management services, VSM will remain proactive in adapting to these changes to ensure that our strategies and services continue to deliver optimal results for our clients.
To view the judgment in full, click below
City of London v. 48th Street Holding Ltd & Principled Offsite Logistics Ltd (POLL) [2025]