When it comes to owning commercial property, there are various costs and expenses that property owners need to consider. One of the key expenses that property owners need to be aware of is the rates payable on empty commercial property. These rates, also known as business rates, can significantly impact the financial health of a business, especially if the property remains vacant for an extended period of time. In this article, we will delve into the details of rates payable on empty commercial property and explore how property owners can navigate this aspect of property ownership.
Business rates are essentially a tax that is levied on non-domestic properties, including commercial properties such as offices, shops, warehouses, and factories. The rates payable are calculated based on the rateable value of the property, which is assessed 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, and it is used to determine how much business rates a property owner needs to pay.
For vacant commercial properties, the rates payable can be a significant burden on property owners. In the past, property owners were granted a 100% exemption from business rates for the first three months that a property remained vacant. However, this exemption was reduced to 50% in 2008, and then further reduced to 0% in 2011. This means that property owners are now required to pay the full rates payable on empty commercial property, regardless of how long the property remains vacant.
The abolition of the empty property rate relief has had a significant impact on property owners, especially during times of economic downturn when vacancies in commercial properties tend to increase. Property owners are now faced with the challenge of paying full business rates on properties that are not generating any income, which can place a strain on their finances.
To address this issue, the government has introduced certain measures to help alleviate the burden of rates payable on empty commercial property. One of these measures is the introduction of small business rates relief, which provides a discount on business rates for properties with a rateable value below a certain threshold. This scheme can help small businesses that are struggling to pay the full rates payable on their empty commercial properties.
Another measure that property owners can take advantage of is the ability to appeal the rateable value of their property if they believe it has been assessed incorrectly. By appealing the rateable value, property owners can potentially reduce the amount of business rates they need to pay on their empty commercial property. However, it is important to note that the process of appealing a rateable value can be complex and time-consuming, and property owners may need to seek professional advice to navigate this process effectively.
In addition to appealing the rateable value, property owners can also explore other options to reduce the financial burden of rates payable on empty commercial property. One option is to explore the possibility of leasing or renting out the property on a short-term basis to generate income and avoid paying the full rates payable. This can help property owners offset some of the costs associated with owning a vacant commercial property and reduce the financial strain on their business.
Property owners can also consider entering into a business rates mitigation scheme, which involves working with a specialist firm to help reduce the amount of business rates payable on their empty commercial property. These firms have the expertise and knowledge to identify potential savings and negotiate with local authorities on behalf of property owners to secure a reduction in business rates.
Overall, rates payable on empty commercial property can be a significant financial burden for property owners, especially during times of economic uncertainty. However, by exploring the various options available, such as appealing the rateable value, taking advantage of small business rates relief, and exploring business rates mitigation schemes, property owners can alleviate some of the financial strain associated with owning a vacant commercial property. It is important for property owners to seek professional advice and explore all available options to navigate this aspect of property ownership effectively.