Who pays the rates on a property leased to a bust company?

[nsa]

I am just about to rent part of a unit (about 1,500 sqft of a 20,000 sqft warehouse) from a landlord who owns the building. The previous tenant signed a ten year lease in 2008 but their business is being struck off. I think the company has gone under but there's no insolvency registered with the Insolvency Service. I've inspected the property and the phone lines are dead so I'm pretty sure they aren't trading any more.

The landlord has agreed to waive rates on the basis that the previous tenant should be paying them. If that situation changes we will talk about the rates again. I'm reasonably comfortable doing this, but my question is: who is legally liable for the rates in this situation?

[NicDale]

In the first instance did the landlord ask for or accept the return of the keys for the premises? If so the landlord is liable. So if you start a new lease on the premises then you will be liable.

If the landlord did not accept the keys the previous tennent is still liable, however if the landlord has actively been marketing the property and has now let the property (to you) then you will be come liable.

Thats my understanding of how the council will look at who is liable to pay the rates.

Nic

[Piglet]

You need to fiind out whether the lease is still in existence or whether it has come to an end.

The lease could come to an end if the LL has taken back the keys (surrender by operation of law) with an intent to relet. Alternatively the LL may have taken a formal surrender from the Administrators or similar.

You also need to find out the status of the previous tenant, if it was a limited company what does the companies house webcheck say about their current status? You may find that they've just walked away from the premises but are still solvent in which case technically they still hold the lease unless there has been some form of surrender.

If the co are in Adminstration the LL can't forfeit the lease without either the consent of the administrators or the consent of the court.

Soooo...you do need more info from the LL and TBH if he's being cagey I'd be a bit worried about what is going on. As occupier the local authority will look to you for the rates so if there is any doubt then you need a written indemnity from the LL that they will pay any rates liability that may occur.

• as a caveat to all of that, even if the LL hasn't taken back the lease up until now, him letting to you is likely to be deemed as him surrending the lease which would put you on the hook for rates anyway.

[nsa]

That's great info. Thanks very much and I'll take it up with the landlord. The previous tenant is being struck off the Companies House register but I can't find any record of them with the Insolvency Service.

Thanks again.

[Chrisgr31]

If you are in occupation you are responsible for the rates. End of story! Not only that but if you are only in part of a larger property, and it is a single rating list entry you are liable for the rates fror the whole property.

So lets say you were thinking about a traditional warehouse building which as a 2 story office area on the front. If you only occupy the warehouse you will be responsible for the rates on the office. Until you get them split off into a seperate rating assessment.

Receivers and Administrators do not pay rates on empty properties, but it depends whether the local authority know who to go after!