When it comes to owning commercial property, there are a myriad of costs and expenses that come along with the territory. One such expense that can catch many property owners off guard is business rates on empty commercial property. These rates can not only be confusing to understand but they can also have a significant impact on the financial health of a business. In this article, we will delve into the complexities of business rates on empty commercial property and provide insights on how property owners can navigate this challenging aspect of property ownership.
Business rates are a tax that is charged on most non-domestic properties, including commercial properties such as shops, offices, warehouses, and factories. The purpose of business rates is to help fund local services provided by local authorities, such as schools, roads, and waste collection. The amount of business rates payable on a commercial property is determined by the rateable value of the property, which is set by the Valuation Office Agency (VOA). The rateable value is based on the rental value of the property as of a specific date.
One of the most significant challenges property owners face when it comes to business rates is the rates payable on empty commercial property. In the past, empty commercial properties were exempt from paying business rates for the first three months after becoming vacant – a policy known as the empty property rate relief. However, in 2008, the government introduced changes to the empty property rate relief system, which drastically reduced the relief available to property owners.
Currently, property owners are required to pay business rates on empty commercial properties after a vacant period of three months, rather than receiving the previous 100% exemption. This change has had a significant impact on property owners, who now find themselves facing hefty business rates bills on properties that are unoccupied. This can be particularly challenging for property owners who are struggling to find tenants or who are in the process of refurbishing or redeveloping their properties.
Property owners face several options when it comes to dealing with business rates on empty commercial property. One option is to apply for unoccupied property rate relief, which provides a 50% discount on business rates for properties that have been empty for more than three months. However, this relief is not automatic and property owners are required to apply for it with their local council. It is important for property owners to be proactive in applying for unoccupied property rate relief to avoid unnecessary financial burdens.
Another option for property owners is to consider leasing their properties on a temporary basis to avoid paying full business rates on empty commercial property. By leasing their properties to short-term tenants, property owners can generate rental income and potentially offset the costs of business rates. This can be a viable option for property owners who are struggling to find long-term tenants or who are looking to generate income while they refurbish or redevelop their properties.
In addition to these options, property owners can also consider appealing the rateable value of their properties with the VOA. If property owners believe that the rateable value of their properties is inaccurate or unfair, they can submit an appeal to have the value reassessed. This can result in a reduction in business rates payable, providing much-needed financial relief to property owners.
Overall, navigating the complexities of business rates on empty commercial property can be a daunting task for property owners. However, by exploring the options available to them and being proactive in managing their business rates, property owners can mitigate the financial impact of empty property rates. Whether it be applying for unoccupied property rate relief, leasing their properties on a temporary basis, or appealing the rateable value of their properties, property owners have several tools at their disposal to navigate this challenging aspect of property ownership. By staying informed and taking proactive steps, property owners can effectively manage their business rates on empty commercial property and ensure the financial health of their businesses.