When it comes to owning commercial property, there are many factors to consider in terms of operating costs. One important aspect that property owners must keep in mind is the rates payable on empty commercial property. These rates, also known as business rates, can have a significant impact on the bottom line for property owners. In this article, we will explore the concept of rates payable on empty commercial property and how property owners can effectively manage these costs.
Business rates are a tax that is imposed by the local government on non-domestic properties, including commercial properties such as shops, offices, warehouses, and factories. These rates are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA) and is typically reassessed every five years. The amount of rates payable is then calculated by multiplying the rateable value by the national non-domestic multiplier, which is set by the government each year.
One issue that property owners may face is the requirement to pay business rates on empty commercial properties. In the past, property owners were granted a temporary relief from paying rates on empty properties for a period of three or six months, depending on the type of property. However, in recent years, the government has implemented changes to the regulations surrounding empty property rates, which have made it more challenging for property owners to avoid paying rates on vacant properties.
Under the current regulations, property owners are required to pay full business rates on empty commercial properties after a period of three months, or six months for industrial properties. This change has had a significant impact on property owners, as it has increased the financial burden of owning vacant properties. Property owners must now carefully consider the costs associated with keeping a property empty, as they will be required to pay rates on the property regardless of whether it is generating any income.
There are, however, some exemptions and reliefs available for property owners who are struggling to pay rates on empty commercial properties. One common relief is the Small Business Rate Relief, which provides discounts on business rates for properties with a rateable value below a certain threshold. Property owners may also be eligible for other reliefs, such as Charity Relief or Rural Rate Relief, depending on the specific circumstances of the property.
Property owners may also consider other strategies for mitigating the impact of rates payable on empty commercial properties. One option is to explore leasing or subletting the property to a temporary tenant, which can help to generate income and alleviate the burden of paying full business rates on the property. Property owners may also consider applying for temporary exemptions or reliefs, depending on the specific circumstances of the property.
In some cases, property owners may decide to demolish or redevelop the property in order to avoid paying rates on an empty commercial property. By making significant changes to the property, property owners may be able to avoid paying business rates during the construction phase. However, it is important to carefully consider the costs and risks associated with demolition or redevelopment before pursuing this option.
Overall, rates payable on empty commercial property can have a significant impact on property owners’ finances. It is important for property owners to carefully consider the costs associated with owning vacant properties and to explore all available options for mitigating these costs. By understanding the regulations surrounding empty property rates and exploring potential exemptions and reliefs, property owners can effectively manage the financial burden of rates payable on empty commercial properties.