When it comes to owning commercial property, there are many costs to consider beyond just the initial purchase price One of the ongoing expenses that property owners must contend with is business rates, which are a tax levied on non-domestic properties in the UK However, what happens when a commercial property sits empty? In this article, we will explore the implications of business rates on empty commercial property and what property owners can do to navigate this potentially costly scenario.
Business rates are calculated based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA) The amount of business rates owed is calculated by multiplying the rateable value by the multiplier set by the government For empty commercial properties, the rules surrounding business rates can be complex and vary depending on the specific circumstances.
One of the key considerations for property owners of empty commercial properties is the Empty Property Rate This is the rate that applies to properties that have been empty for a certain period of time In England, after a property has been empty for three months, the Empty Property Rate kicks in, which is set at 100% of the normal business rates bill In Scotland and Wales, the period before the Empty Property Rate applies is six months.
The imposition of the Empty Property Rate can put a significant financial strain on property owners, as they are required to pay the full amount of business rates even though the property is not generating any income This can be particularly challenging for small business owners or landlords who are struggling to find tenants for their properties.
There are, however, some exemptions and reliefs available to help alleviate the burden of business rates on empty commercial property For example, properties with a rateable value below a certain threshold may be eligible for Small Business Rate Relief, which provides a discount on business rates for qualifying properties business rates empty commercial property. Additionally, certain properties may be eligible for exemptions from the Empty Property Rate, such as newly built properties that have not been occupied yet or properties being redeveloped.
Property owners of empty commercial properties should also be aware of the Empty Property Relief that may be available This relief can provide a temporary reduction in the Empty Property Rate for certain types of properties, such as industrial properties, listed buildings, or properties in rural areas Property owners should check with their local council to see if they qualify for any relief or exemption from business rates on their empty commercial property.
In addition to exemptions and reliefs, property owners of empty commercial properties should also consider other strategies for minimizing the impact of business rates One option is to actively market the property for rental or sale in order to generate income and avoid paying the Empty Property Rate Property owners can also consider negotiating with their local council to come to a payment arrangement or seek a reduction in the rateable value of the property.
Another option for property owners of empty commercial properties is to consider leasing the property on a short-term basis to a charity or community group Properties that are being used for charitable purposes may be eligible for 80% relief on business rates, which can help offset the costs of keeping the property empty This can also have the added benefit of contributing to the local community and potentially building relationships that could lead to a long-term tenant for the property.
In conclusion, navigating the impact of business rates on empty commercial property can be a complex and costly endeavor for property owners Understanding the rules and regulations surrounding business rates, as well as exploring options for exemptions, reliefs, and alternative uses for the property, can help property owners manage the financial burden of empty commercial properties By staying informed and proactive, property owners can minimize the impact of business rates and maximize the potential of their properties.