Empty rates on commercial property can be a significant financial burden for property owners. In the UK, empty properties are liable for business rates, even if they are not generating any income. This can place a strain on owners who are unable to secure tenants or who are undergoing refurbishment work. In this article, we will explore the issue of empty rates commercial property, and provide tips on how property owners can manage this cost effectively.
Empty rates, also known as business rates on empty properties, were introduced in the UK as a way to discourage property owners from leaving their buildings vacant. The logic behind this is to encourage the efficient use of commercial properties and to prevent them from becoming eyesores or security risks in their local area. However, this policy can be a double-edged sword for property owners who are struggling to find tenants or who are in the process of refurbishing their buildings.
The system for calculating empty rates can vary depending on the location and type of property. In most cases, empty rates are payable at the same rate as occupied properties for the first three months of vacancy. After this initial period, the rateable value can be reduced by 10% for commercial properties and 50% for industrial properties. However, the burden of empty rates can still add up quickly, especially for larger properties or those in prime locations.
So, what can property owners do to manage the cost of empty rates on their commercial properties? Here are some tips:
1. Review your property’s rateable value: It’s important to check that the rateable value assigned to your property is accurate. If you believe that it is too high, you can appeal to the Valuation Office Agency (VOA) to have it reassessed. A lower rateable value can significantly reduce the amount of empty rates you are liable to pay.
2. Consider short-term leases or licenses: If you are struggling to find a long-term tenant for your property, you could consider offering short-term leases or licenses to fill the gap. This may not only generate some income but can also help to reduce the amount of empty rates you are required to pay.
3. Utilize exemptions or reliefs: There are certain exemptions and reliefs available for empty properties, such as those undergoing major refurbishment or situated in designated Enterprise Zones. It’s worth investigating whether your property qualifies for any of these exemptions, as they can provide significant cost savings.
4. Explore alternative uses: If your property is proving difficult to let as intended, you could consider exploring alternative uses or tenants. For example, converting office space into residential units or allowing temporary pop-up shops can generate income and help to alleviate the burden of empty rates.
5. Stay informed about changes in legislation: The rules and regulations surrounding empty rates commercial property can change, so it’s important to stay informed about any updates or new schemes that may impact your property. Consulting with a property advisor or tax expert can help you to navigate these changes and minimize your liabilities.
empty rates commercial property can be a daunting prospect for property owners, but with careful planning and proactive management, it is possible to mitigate the financial impact. By taking steps such as reviewing rateable values, exploring exemptions, and seeking alternative uses for your property, you can effectively manage the costs associated with empty rates. It’s essential to stay informed and seek professional advice when needed to ensure that you are not overburdened by this additional cost.