Empty rates commercial property, also known as business rates, can often be a confusing topic for property owners and tenants alike. In this guide, we will delve into what empty rates are, why they are charged, how they are calculated, and ways to possibly reduce or avoid them.
What are empty rates commercial property?
Empty rates commercial property are essentially a tax that local authorities charge on properties that are unoccupied. This tax is based on the rateable value of the property and can be a significant financial burden for property owners, especially during periods of vacancy.
Why are Empty Rates Charged?
The reasoning behind charging empty rates commercial property is twofold. Firstly, it aims to encourage property owners to keep their properties occupied and in use, rather than sitting empty for extended periods. This is seen as a way to stimulate economic activity and prevent urban blight in commercial areas.
Secondly, empty rates provide revenue for the local government, which can then be used to fund essential services such as schools, healthcare, and infrastructure development.
How are empty rates commercial property Calculated?
Empty rates commercial property are calculated based on the rateable value of the property. This value is assessed by the Valuation Office Agency (VOA) and is used as the basis for calculating the business rates payable on the property.
The rateable value is determined by factors such as the size, location, and condition of the property, as well as rental values in the area. Once the rateable value is established, it is multiplied by the national non-domestic rate (NNDR) multiplier to determine the amount of empty rates payable.
Ways to Reduce or Avoid Empty Rates
While empty rates commercial property can be a costly expense, there are some strategies that property owners can employ to reduce or avoid them altogether. One common tactic is to temporarily occupy the property with short-term tenants or pop-up shops. This can help to demonstrate that the property is actively being marketed for rent and may qualify for exemptions or reductions in empty rates.
Another option is to apply for rate relief or exemptions if the property meets certain criteria. For example, properties undergoing refurbishment may be eligible for a temporary exemption from empty rates. Similarly, properties with a rateable value below a certain threshold may qualify for small business rate relief.
Property owners can also consider negotiating with the local authority to reduce the rateable value of the property. This can be done by providing evidence of changes in the local market or the condition of the property that may affect its value.
Conclusion
Empty rates commercial property can be a significant financial burden for property owners, especially during times of vacancy. Understanding how these rates are calculated and exploring ways to reduce or avoid them can help property owners to better manage their costs and maximize the value of their investments.
By staying informed about empty rates commercial property and taking proactive steps to address them, property owners can mitigate their financial impact and ensure that their properties remain competitive in the market. With careful planning and strategic decision-making, empty rates commercial property need not be a major obstacle to achieving success in the commercial real estate sector.