When it comes to owning a commercial property, there are numerous factors that can affect the financial obligations of the property owner. One such factor is the rates payable on empty commercial property. These rates, also known as business rates, are a tax that property owners must pay to the local government. However, when a commercial property sits vacant, the rates payable can become a significant burden on the owner. In this article, we will delve into the intricacies of rates payable on empty commercial property and provide insights on how property owners can navigate this complex issue.
Business rates are a form of tax levied on non-domestic properties in the UK. They are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is a reflection of the rental value of the property as of a specific date, known as the valuation date. The local government uses the rateable value to calculate the amount of business rates that property owners must pay.
For commercial properties that are empty, the rates payable can pose a financial challenge for property owners. Traditionally, empty commercial properties were exempt from paying business rates for the first three months. This was intended to give property owners a grace period to find new tenants or make necessary repairs to the property. However, in recent years, the government has introduced changes to the regulations surrounding rates payable on empty commercial property.
As of April 2017, the government implemented new regulations that significantly reduced the exemption period for empty commercial properties. Now, property owners must pay business rates on empty commercial properties after they have been vacant for more than three months. This change has had a significant impact on property owners, as they are now faced with the prospect of paying rates on properties that may have been sitting empty for an extended period of time.
One way that property owners can mitigate the financial impact of rates payable on empty commercial properties is by taking advantage of the empty property rate relief scheme. This scheme provides relief on business rates for certain types of empty properties, such as industrial properties and listed buildings. Property owners can apply for this relief through their local council, and if approved, they may be entitled to a significant reduction in their rates payable.
Another option for property owners is to explore the possibility of leasing the property on a short-term basis. By leasing the property, even for a short period of time, property owners may be able to generate rental income that can help offset the rates payable on the property. This can be a particularly effective strategy for properties that are expected to be empty for an extended period, as it allows property owners to generate income while they search for a long-term tenant.
In some cases, property owners may also consider appealing the rateable value of their property to the VOA. If they believe that the rateable value is inaccurate or does not reflect the actual rental value of the property, property owners can request a reassessment of the rateable value. If successful, this can result in a reduction in the rates payable on the property, providing much-needed relief to property owners.
Overall, rates payable on empty commercial property can be a significant financial burden for property owners. However, by understanding the regulations surrounding business rates and exploring available relief schemes, property owners can take steps to alleviate the financial impact of rates on their properties. Whether through applying for empty property rate relief, leasing the property on a short-term basis, or appealing the rateable value, property owners have options available to help them manage their financial obligations and navigate the complexities of rates payable on empty commercial property.