Empty commercial properties can be a major headache for property owners and businesses alike. Not only do empty properties generate no income, but they can also incur significant expenses in the form of business rates. Business rates are a tax that businesses pay on non-domestic properties, including commercial buildings, offices, and shops. The rates paid on empty commercial properties can take a significant toll on property owners, making it crucial for them to understand how they are calculated and how they can be mitigated.
rates on empty commercial property can add up quickly, especially for larger properties located in prime locations. The rates are calculated 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 open market rental value of the property at a specific date, usually every five years. Once the rateable value is determined, it is multiplied by the uniform business rate (UBR) set by the government to calculate the annual business rates bill.
For empty commercial properties, the amount of rates payable depends on the length of time the property has been empty. In England, for example, empty commercial properties receive a full exemption from business rates for the first three months after they become empty. However, after the initial three-month period, the property owner is required to pay 100% of the rates unless they qualify for an exemption. This can be a significant financial burden, especially for property owners with multiple empty properties or those who are struggling to find tenants.
There are several ways that property owners can mitigate the impact of rates on empty commercial properties. One common strategy is to seek relief or exemptions from the local council. For example, in England, some properties may be eligible for a three-month exemption from rates if they are undergoing major repair works or structural alterations. Additionally, properties owned by charities or community amateur sports clubs may be eligible for an 80% discount on rates, while properties with a rateable value of under £12,000 may qualify for small business rate relief. Property owners should consult with their local council or a professional advisor to determine if they qualify for any relief or exemptions.
Another option for property owners facing high rates on empty commercial properties is to consider leasing the property on a short-term basis. By leasing the property to a temporary tenant, property owners can avoid paying the full rates on the property while generating some income to help cover the costs. Short-term leases can be particularly beneficial for properties that are difficult to lease long-term or that require refurbishment before attracting a permanent tenant. Property owners should carefully consider the terms of any short-term lease agreements to ensure that they are protected in case of default or damage to the property.
Property owners may also consider appealing the rateable value of their empty commercial property to reduce their rates bill. The rateable value set by the VOA is based on a number of factors, including the size, location, and condition of the property. If property owners believe that the rateable value assigned to their property is inaccurate or unfair, they can appeal to the VOA to have it reassessed. This process can be complex and time-consuming, but it has the potential to result in significant savings on rates bills for property owners.
In conclusion, rates on empty commercial properties can be a significant financial burden for property owners, especially in the current economic climate. Property owners should take proactive steps to mitigate the impact of rates on their empty properties, including seeking relief or exemptions, leasing the property on a short-term basis, and appealing the rateable value. By understanding how rates on empty commercial properties are calculated and exploring all available options for reducing their rates bill, property owners can better manage their costs and improve the profitability of their properties.