OWNERS of empty properties are exploiting legal loopholes to avoid paying business rates, according to the leader of Bradford Council.

Councillor David Green said a host of rates avoidance schemes were costing the public purse up to £2m a year.

He said the situation was "farcical", as it withheld funding from much-needed services while also doing nothing to get empty shops or business premises back into proper use.

Currently, 21.7 per cent of commercial buildings in Bradford are vacant, according to the Local Data Company.

Under Government rules, the owners of most business premises have to start paying rates once the buildings have been lying empty for three months - a move designed to encourage landlords to bring them back into use.

But Cllr Green said a whole industry of property agents were now advising people how to exploit the system - and there was little the Council could do to fight it.

He said: "It means the people of this district are losing between £1m and £2m a year that could be being spent on regeneration or services.

"If they spent as much time trying to bring these businesses back into economic use as they do avoiding business rates, I think we would have a much stronger economy."

Cllr Green said the authority had noticed a number of different ruses being used, but all involved the "cynical manipulation of the system."

Some made it appear that empty buildings were being used for storage, while others put firms into buildings for as short a time as possible to trigger another three-month grace period.

Two instances of this "intermittent occupation" had cost the district nearly £1 million between them, Cllr Green said.

Another scheme exploits a loophole in legislation for firms in liquidation. One example had cost the authority £356,000 in lost rates, Cllr Green said.

He said: "It’s a farcical situation, when we desperately need the jobs and we desperately need the economic growth in Bradford."

But a body which represents property agents has defended the practice, saying they had an obligation to provide the best advice to their clients.

David Broschomb, national chairman of the Institution of Commercial and Business Agents, said: "The point to note is that these schemes are not illegal.

"When property agents advise clients, they must do so with their best interest in mind; agents have an obligation to provide the best advice, and so if such an option is available, it is probable that this is the route they will recommend."

He added the economic conditions hadn't helped the situation.

He said: "Since 2008, we have seen a higher number of commercial properties become vacant due to people going out of business in the recession, and a lack of new businesses entering the market to replace. This is only just starting to pick up."