Property guardians and business rates: what owners pay

In short

• Guardians do not normally take a commercial building off business rates. The owner stays in rateable occupation.
• Empty property relief is 3 months (6 for industrial). Some buildings are exempt with no time limit.
• Council tax is a different tax. On residential buildings the owner is often the person liable, and long-empty homes can face a premium.
• What guardians can still change is mostly security and, with the insurer's agreement, insurance conditions. Check each with the people who decide it.

What changed in 2020

Before 2020, some firms said guardians could change a building's status. The idea was that people living in a vacant office made it "domestic", so it would pay council tax instead of business rates. A London Assembly committee report in 2018 repeated that an owner "can save up to 90 per cent of their business rates bill this way". It also said the Valuation Office Agency was slow to revalue, and that Lambeth was still paying business rates on buildings guardians had lived in for months (London Assembly, 2018, paras 3.7 to 3.8).

The Court of Appeal settled the question on 4 December 2020 in Southwark v Ludgate House [2020] EWCA Civ 1637. The building was a 173,633 sq ft office block in Southwark. By 17 August 2015, 46 guardians lived there, each paying a licence fee of about £500 a month. The judgment notes the arrangement came "with the prospect of mitigating liability for nondomestic rates" (paras 4, 7, 19, 20).

The court held that:

• The building was one unit for rating, not a set of rooms. The Upper Tribunal had been wrong to treat the guardians' rooms as separate (para 84).
• The owner kept control. The right to move a guardian between rooms was "very significant interference" and had in fact been used (paras 76, 79 to 80).
• The guardians were like lodgers, caretakers or service occupiers, whose occupation is not what rating looks at (paras 64 to 67). Their licences gave no right of exclusive possession (para 73), and their presence was "an essential component" of what the owner had arranged (para 70).

So the owner, not the guardians, was in rateable occupation. This is a decision on those facts: an office block, standard licences, no exclusive possession, and an owner free to move guardians. Another building could differ, which is why a rating surveyor or the council is the place to check.

Empty property relief, briefly

In England an empty building pays no business rates for 3 months from when it becomes empty. Industrial premises such as warehouses get a further 3 months (GOV.UK).

Some buildings stay relieved until they are reoccupied:

• listed buildings
• buildings with a rateable value under £2,900
• buildings owned by charities, if the next use will be mostly charitable
• community amateur sports club buildings, if the next use will be mostly as a sports club

A building that was occupied and then empties again can start a fresh period of relief, but only after enough occupation. From 1 April 2024 that is 13 weeks in England, up from 6 (SI 2024/323). A building that becomes unoccupied again within 13 weeks is treated as having been empty throughout.

Courts have also looked at schemes designed only to shift empty rates away from the owner. In 2021 the Supreme Court held that, on the facts agreed for that appeal, leasing empty buildings to shell companies did not move the liability off the landlords (Rossendale v Hurstwood [2021] UKSC 16).

Wales and Scotland differ. Wales requires 26 weeks of occupation to restart relief, from 1 April 2022 (Caerphilly council). In Scotland, empty property relief became a matter for each council from 1 April 2023 (Scottish Government).

What guardians can still change

None of this removes the other reasons owners use guardians. We have no independent figures for how much they save, so we give none.

• Security. Someone living in a building is a different kind of cover from a guard or steel screens. Lambeth told the London Assembly in 2018 that cost was its main reason (report, para 3.5). Those are statements from that time, not current prices.
• Insurance. Policies on empty buildings often limit cover or add conditions after a set number of unoccupied days. Whether an insurer treats licensed guardians as occupation is the insurer's decision. Get it in writing before relying on it. The "up to 50%" premium cut quoted in the 2018 report came from a guardian firm's own submission (report, para 3.5).
• Council tax on empty homes. See the next section.

Council tax on residential buildings

Council tax applies to homes. Business rates apply to commercial buildings. In Ludgate House, guardians living in a former office did not turn it into homes for council tax: the building stayed on the business rates list.

Who is liable

The Council Tax (Liability for Owners) Regulations 1992 make the owner liable for some homes. Under class C the owner is liable for a dwelling that is an HMO, was built or adapted for people who are not one household, or where the occupiers each have a tenancy or licence for part only (regulation 2).

So in a shared guardian home, the owner may be the person the council bills. The licence agreement then decides what the guardian pays. The London Assembly noted in 2018 that the cost "usually falls to the guardian or the guardian company" (para 3.6). Check who pays under your own agreement.

Empty homes premiums

• Long-term empty homes. A home unoccupied and substantially unfurnished for a year can be charged a premium by a council that chooses to. It was 2 years until the Levelling-up and Regeneration Act 2023 changed it for years from 1 April 2024. The premium is capped at 100% extra, 200% after 5 years empty and 300% after 10 (Local Government Finance Act 1992, s.11B). Gaps of 6 weeks or less are ignored.
• Second homes. A council can charge up to 100% extra on a furnished home with no resident. The first decision had to be made at least a year ahead, so the earliest a second homes premium could start was 1 April 2025 (s.11C; 2023 Act, s.80).
• Exceptions. Some homes are exempt. The government's guidance lists them (GOV.UK).

The premiums depend on a home being unoccupied (long-term empty) or having no resident (second homes). A home people live in is not in that position. We found no source on how councils treat guardians who move between rooms, so ask the council before counting on it.

Wales and Scotland set their own premium rules. We have not confirmed them here.

Old claims you will still see

Search results for this topic still carry claims from before 2020. Typical ones:

• That owners can "save up to 90%" of an empty building's business rates.
• That keeping a building occupied with guardians makes the owner eligible for rate relief.

These come from the time when the idea was that guardians moved a building to council tax. Ludgate House was the test of that idea, and it did not work. Some of the pages are old, some are from firms that sell guardianship, and some were never updated. Look for the date, and check the claim against the court's judgment above.

You can see what firms say about themselves, and how they differ, on the firms and their rules page.

Questions owners ask