When it comes to owning commercial property, one of the many costs that property owners must contend with is business rates. These rates are set by the local government and are based on the rateable value of the property. However, what happens when a commercial property sits empty? How are rates affected and what can property owners do to mitigate the impact? In this article, we will explore the issue of rates on empty commercial property and discuss the implications for property owners.
Business rates are a significant expense for any commercial property owner. They are a tax on non-domestic properties that are used to fund local services such as schools, roads, and police forces. The rates are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The VOA assesses the property and assigns a rateable value based on factors such as the size, location, and condition of the property.
When a commercial property is occupied, the property owner is responsible for paying the business rates. However, if the property sits empty, the situation becomes more complex. In most cases, property owners are still required to pay rates on empty commercial property, even if it is not generating any income. This can be a significant financial burden, especially for property owners who are struggling to find tenants or who are in the process of refurbishing the property.
The rules surrounding rates on empty commercial property can vary depending on the location of the property and the current state of the property market. In England, for example, properties with a rateable value of less than £2,900 are exempt from business rates when they are empty. Properties with a rateable value between £2,900 and £12,000 are eligible for a partial exemption. However, properties with a rateable value above £12,000 are still required to pay rates in full, even if they are empty.
In some cases, property owners may be able to apply for relief from business rates on empty commercial property. This can include temporary rates relief for properties that are undergoing refurbishment or redevelopment, or small business rates relief for properties with a rateable value below a certain threshold. Property owners should check with their local council to see if they qualify for any relief programs.
Despite the challenges of paying rates on empty commercial property, there are some steps that property owners can take to mitigate the impact. For example, property owners can try to negotiate with the local council to see if they can reduce their rates or arrange a payment plan. Property owners can also take steps to minimize the rateable value of their property, such as by removing fixtures and fittings that are no longer needed or by subdividing the property into smaller units.
Another option for property owners is to consider leasing the property on a short-term basis to generate some income and help cover the cost of rates. This can be a good option for property owners who are struggling to find a long-term tenant or who are in the process of refurbishing the property. Short-term leasing can also help to keep the property in good condition and prevent it from falling into disrepair.
In conclusion, rates on empty commercial property can be a significant financial burden for property owners. While property owners are still required to pay rates on empty properties in most cases, there are some options available to help mitigate the impact. By exploring relief programs, negotiating with the local council, and considering short-term leasing options, property owners can navigate the challenges of rates on empty commercial property and maintain the financial health of their investment.