When it comes to owning commercial property, there are many expenses that need to be taken into consideration. One of the costs that property owners need to be aware of is the rates payable on empty commercial property. These rates, also known as business rates, can often be a significant expense for property owners, especially if their property remains vacant for an extended period of time.
In this article, we will take a closer look at what rates payable on empty commercial property are, how they are calculated, and some strategies that property owners can use to reduce this expense.
Business rates, also known as non-domestic rates, are taxes that are paid on most commercial properties in the UK. These rates are calculated based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA). The rateable value is an estimate of the open market rental value of a property at a specific date, usually set every five years.
For occupied commercial properties, business rates are usually paid by the tenant. However, when a property becomes vacant, the responsibility for paying the rates falls on the property owner. This can be a significant financial burden, especially if the property remains empty for an extended period of time.
The rates payable on empty commercial property are usually charged at the same rate as if the property were occupied. This means that property owners need to continue paying the full amount of rates even if their property is vacant. In some cases, property owners may be eligible for a temporary exemption from paying rates on empty properties, but this is usually limited to a certain period of time.
There are a few strategies that property owners can use to reduce the rates payable on empty commercial property. One option is to appeal the rateable value of the property if they believe it has been overestimated. The VOA allows property owners to challenge their rateable value if they think it is incorrect, which can help to reduce their rates liability.
Another option is to look into available reliefs and exemptions that may apply to empty commercial properties. For example, property owners may be able to claim an exemption for up to three months if their property is undergoing repairs or structural alterations. They may also be eligible for a relief known as the “empty property rate relief,” which provides a 100% discount on rates for certain types of empty properties.
Property owners may also consider renting out their property on a short-term basis to avoid paying rates on an empty property. By finding a temporary tenant, even for a short period of time, property owners can transfer the responsibility of paying rates back to the tenant while still generating some rental income.
It is important for property owners to be proactive in managing their rates payable on empty commercial property. By staying informed about the exemptions and reliefs that may be available to them, property owners can reduce the financial burden of paying rates on empty properties.
In conclusion, rates payable on empty commercial property can be a significant expense for property owners. Understanding how these rates are calculated and being aware of the available exemptions and reliefs can help property owners reduce this financial burden. By taking proactive steps to challenge rateable values, explore available reliefs, and consider short-term rentals, property owners can better manage the costs associated with empty commercial properties.