When it comes to owning commercial property, there are a lot of costs to consider. From maintenance and repairs to insurance and utilities, the expenses can really add up. One often-overlooked cost is the business rates that are payable on empty commercial properties. Known as empty rates, this tax can catch many property owners off guard. In this article, we will explore what empty rates are, how they are calculated, and what you can do to minimize the impact on your bottom line.
Empty rates are a form of local taxation that is levied on non-domestic properties in the UK. These rates are payable on commercial properties that are empty and unused, meaning no company is actively operating within the premises. The aim of empty rates is to encourage property owners to put their buildings back into productive use and prevent them from leaving them vacant for extended periods.
The rateable value of a commercial property is used to calculate the amount of empty rates that must be paid. This value is determined by the Valuation Office Agency (VOA) and is based on the property’s rental value. If a property is empty for three months or more, the owner is typically required to pay 100% of the normal business rates. However, there are some exceptions to this rule, such as properties with a rateable value of less than £2,900, which are exempt from empty rates entirely.
The amount of empty rates that a property owner must pay can vary greatly depending on the size and location of the building. Larger properties in prime locations will typically have higher rateable values, resulting in higher empty rate payments. This can be a significant financial burden for property owners, especially if they are unable to find a tenant to occupy the space.
There are some ways in which property owners can reduce the impact of empty rates on their finances. One option is to take advantage of the empty property rate relief scheme, which provides a 50% discount on empty rates for certain types of properties. This relief is available for most industrial and warehouse properties, as well as properties undergoing major repairs or renovations. Property owners should check with their local council to see if they qualify for this relief.
Another strategy for minimizing empty rates is to actively market the property and try to find a tenant as quickly as possible. By keeping the building occupied, property owners can avoid paying empty rates altogether. It is also important for property owners to keep the property in good condition and make any necessary repairs or improvements to attract potential tenants.
In some cases, property owners may choose to appeal the rateable value of their property in order to lower their empty rate payments. This process involves submitting evidence to the VOA to demonstrate that the rateable value is inaccurate or unfair. While this can be a lengthy and complex process, it can result in significant cost savings for property owners in the long run.
Overall, empty rates on commercial property can be a substantial financial burden for property owners. By understanding how these rates are calculated and exploring strategies to minimize their impact, property owners can help alleviate some of the financial strain. Whether it’s taking advantage of rate relief schemes, actively marketing the property, or appealing the rateable value, there are options available to ease the burden of empty rates. By being proactive and informed, property owners can better manage this aspect of owning commercial property.
In conclusion, empty rates commercial property can be a challenging aspect of property ownership. However, by understanding the calculation of these rates and exploring ways to reduce their impact, property owners can navigate this cost more effectively. From taking advantage of rate relief schemes to actively marketing the property, there are strategies that can help property owners minimize the financial burden of empty rates. By staying informed and proactive, property owners can better manage the costs associated with owning commercial property.