When it comes to commercial property ownership, there are many costs associated with maintaining and managing the property. One of the expenses that property owners often overlook or are unaware of is the rates payable on empty commercial property. These rates can be a significant financial burden for property owners, especially if the property remains vacant for an extended period.
In the United Kingdom, business rates are taxes that are levied on non-domestic properties, including commercial properties. These 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 property’s open market rental value as of a specific date, usually every five years. The local council uses the rateable value to calculate the business rates payable by the property owner.
When a commercial property is empty, property owners are still liable to pay business rates on the property. This can come as a surprise to some property owners who may assume that they are exempt from paying rates on an empty property. However, even if a property is vacant, the owner is still responsible for paying rates unless they qualify for an exemption or relief.
There are several exemptions and reliefs available to property owners who have empty commercial properties. The most common exemption is the three-month empty property rate relief, which provides a 100% discount on business rates for the first three months that the property is empty. This relief is intended to give property owners some time to find a new tenant or decide what to do with the property without incurring additional financial costs.
After the initial three-month period, the property owner may be eligible for a further three months of 50% relief on the business rates. However, this relief is not automatic, and property owners must apply to the local council to receive it. Property owners may also be eligible for other exemptions or reliefs depending on the specific circumstances of the property and the owner’s situation.
If a property remains empty for an extended period, the rates payable on the property can become a significant financial burden. In some cases, property owners may struggle to cover the costs of maintaining an empty property and paying the business rates. This can lead to financial difficulties for property owners and may make it challenging to attract tenants or buyers for the property.
To help property owners manage the costs of rates payable on empty commercial property, the government has introduced various schemes and initiatives. For example, the government has proposed a scheme called the “Future High Streets Fund” to support local councils in revitalizing town centers and attracting businesses to empty commercial properties. The fund aims to provide financial assistance to property owners and local councils to help reduce the number of vacant properties and stimulate economic growth in town centers.
In addition to government initiatives, property owners can also take steps to reduce the business rates payable on empty commercial properties. For example, property owners can consider applying for different types of relief or exemptions that may be available to them. Property owners can also explore alternative uses for the property, such as converting it into residential units or office space, to generate income and reduce the rates payable on the property.
Overall, rates payable on empty commercial property can be a significant financial burden for property owners. However, there are exemptions, reliefs, and government initiatives available to help property owners manage these costs and stimulate economic growth in town centers. By understanding the implications of rates payable on empty commercial property and exploring different options for managing these costs, property owners can make informed decisions about their properties and maximize their financial returns.