When it comes to owning commercial property, there are various costs and expenses that property owners must consider. One such expense that can often catch property owners off guard is the rates payable on empty commercial property. These rates, also known as business rates, can significantly impact the financial well-being of property owners if not properly understood and managed. In this article, we will delve into what rates payable on empty commercial property are, how they are calculated, and what property owners can do to minimize the impact of these rates on their finances.
Business rates are taxes that are charged on most non-domestic properties, including commercial properties such as shops, offices, warehouses, and factories. These rates are set by the government and local authorities and are used to help fund local services such as schools, roads, and public transportation. The amount of business rates payable on a commercial property is based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is an estimate of the annual market rent that the property could achieve if it were rented out on the open market.
For empty commercial properties, the rates payable can be a significant financial burden for property owners. In the past, property owners were granted a three-month exemption from paying business rates on empty commercial properties. However, in recent years, the government has introduced changes to the regulations surrounding empty property rates. As of April 1, 2008, most commercial properties are subject to business rates even when they are empty. This change was implemented to incentivize property owners to bring empty properties back into use and discourage them from keeping properties vacant for extended periods.
Property owners of empty commercial properties are required to pay business rates at a rate of 50% of the normal rate, after the property has been empty for three months. This rate can increase to 100% of the normal rate if the property has been empty for more than six months. These rates can quickly add up, especially for property owners who own multiple empty properties or properties that are difficult to rent out.
There are, however, some exemptions and reliefs available to property owners who own empty commercial properties. For example, properties with a rateable value of under £2,900 are exempt from paying business rates on empty properties. Additionally, properties that are exempt from business rates while they are occupied, such as agricultural land and buildings, are also exempt from paying business rates on empty properties. Property owners who are actively looking for a new tenant for their empty property may also be eligible for a 100% relief on business rates for up to three months.
Property owners who are struggling to pay the rates on their empty commercial properties should explore all available options for relief and exemptions. This may involve speaking to their local council about potential relief schemes, as well as seeking advice from a professional property management company or tax advisor. Additionally, property owners should consider investing in their empty properties to make them more attractive to potential tenants and reduce the amount of time that the property remains vacant.
In conclusion, the rates payable on empty commercial properties can be a significant financial burden for property owners. Understanding how these rates are calculated and what options are available for relief and exemptions is essential for property owners to effectively manage this expense. By taking proactive steps to minimize the impact of empty property rates, property owners can protect their finances and ensure that their properties remain profitable in the long run.
By implementing strategies to bring empty properties back into use and exploring all available options for relief and exemptions, property owners can navigate the challenges of rates payable on empty commercial properties and set themselves up for success in the competitive commercial property market.