When it comes to owning commercial property, there are various costs that need to be considered beyond just the purchase price or rental fees. One of the costs that property owners need to be aware of is the rates payable on empty commercial property. These rates, also known as business rates, can add up to a significant amount of money if the property remains unoccupied for an extended period of time. In this article, we will delve into what rates payable on empty commercial property entail and how property owners can navigate through this aspect of owning commercial real estate.
Business rates are a tax that is levied on non-domestic properties in the UK. These rates are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value represents the rental value of the property as of a specific date and is used as the basis for calculating how much a property owner needs to pay in business rates.
When a commercial property becomes empty, property owners are still required to pay business rates on the vacant property. This is because business rates are a tax on the occupation of the property, rather than on its use. In other words, property owners are liable to pay business rates regardless of whether the property is occupied or empty.
The rates payable on empty commercial property can be a significant financial burden for property owners, especially if the property remains vacant for an extended period of time. However, there are some exemptions and reliefs available that can help property owners alleviate the financial strain of paying business rates on empty properties.
One of the exemptions available to property owners is the empty property rate relief. This relief allows property owners to receive a discount on their business rates for a certain period of time after the property becomes unoccupied. The duration of the relief period varies depending on the type of property and the local council’s regulations. In some cases, property owners might be eligible for a 100% discount on their business rates for a certain period of time before the full rates kick in.
There are also other reliefs available to property owners, such as the small business rate relief and the charitable rate relief. These reliefs are aimed at supporting small businesses and charitable organizations by reducing the amount of business rates they need to pay. Property owners should check with their local council to see if they are eligible for any of these reliefs.
Property owners can also take proactive steps to reduce their liability for business rates on empty properties. For example, property owners can actively market the property to attract potential tenants or buyers. By demonstrating that efforts are being made to reoccupy the property, property owners might be able to negotiate a lower rateable value with the VOA, which can in turn lower the amount of business rates payable on the property.
Additionally, property owners should keep in mind that there are certain circumstances in which they might be exempt from paying business rates on empty properties. For example, newly built or refurbished properties are exempt from paying business rates for a period of three months. Property owners should familiarize themselves with the rules and regulations surrounding business rates on empty properties to ensure that they are complying with the law and taking advantage of any exemptions or reliefs available to them.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners. However, with the right knowledge and proactive steps, property owners can navigate through this aspect of owning commercial real estate and minimize their liability for business rates on empty properties. By familiarizing themselves with the rules and regulations surrounding business rates and exploring any exemptions or reliefs available to them, property owners can effectively manage the costs associated with owning empty commercial properties.