Business rates can be a headache for property owners, especially when it comes to empty properties. In the UK, business rates are charges that commercial property owners need to pay to local authorities. These rates are based on the rental value of the property, and they can be a significant financial burden for owners of vacant properties.
When it comes to empty properties, business rates can be a particularly difficult issue. Property owners may find themselves facing hefty bills even when their property is not generating any income. This can be a serious problem, especially for small businesses or property investors who may struggle to keep up with the payments.
So, what exactly are business rates on empty property, and how can property owners navigate this complex issue? Let’s take a closer look.
business rates on empty property are a contentious issue in the UK. The government introduced changes to the business rates system in 2008, which meant that property owners would no longer be entitled to a full exemption from business rates on empty properties. Instead, they would have to pay rates at a reduced rate of 50% for the first three months that a property is empty, and then at the full rate thereafter.
This change was intended to discourage property owners from leaving properties empty for long periods, thereby incentivizing them to bring them back into use. However, it has been a point of contention for many property owners who argue that they are being unfairly penalized for circumstances beyond their control.
One of the main concerns for property owners is the lack of flexibility in the business rates system. Even if a property owner is actively seeking a tenant or looking to renovate a property, they will still be liable for business rates on an empty property. This can make it financially unviable for property owners to maintain or improve their properties, especially in a sluggish property market.
There are some exemptions to business rates on empty property. For example, industrial properties are exempt from business rates for the first six months that they are empty, with the exemption period extended to 12 months for certain qualifying industrial properties. This is intended to support the industrial sector and encourage property owners to bring vacant industrial properties back into use.
Additionally, properties with a rateable value below a certain threshold are exempt from business rates on empty property. This threshold is set by the government and is subject to change each year. Property owners should check with their local authority or a professional advisor to see if their property qualifies for this exemption.
There are also some reliefs available to property owners who are struggling to pay business rates on empty property. For example, charitable organizations and community amateur sports clubs are entitled to an 80% relief on business rates for empty properties that are held for charitable purposes. This can be a significant saving for organizations that may be operating on tight budgets.
Property owners should also be aware of the implications of leaving a property empty for an extended period. In some cases, local authorities may take action to compulsorily purchase a property that has been vacant for a long time, especially if it is having a detrimental effect on the local area. This can be a last resort for local authorities, but property owners should be aware of the potential consequences of leaving a property empty for an extended period.
In conclusion, business rates on empty property can be a thorny issue for property owners in the UK. While the government has introduced measures to encourage property owners to bring their vacant properties back into use, many owners still find themselves struggling to keep up with the payments. Property owners should be aware of the exemptions and reliefs available to them and seek professional advice if they are unsure about their obligations. With careful planning and consideration, property owners can navigate the complexities of business rates on empty property and avoid falling foul of the regulations.