When it comes to owning commercial property, one important factor that every property owner should be aware of is the rates payable on empty commercial property. These rates, also known as business rates, can be a significant expense for property owners, especially when the property is vacant. Understanding how these rates are calculated and what options are available to reduce or mitigate them is essential for property owners to make informed decisions about their investments.
Business rates are taxes that business owners must pay 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). The rateable value represents the property’s open market rental value as of a specific date, usually set by the VOA. Property owners are required to pay business rates to their local authority, which uses the revenue to fund local services such as schools, roads, and public transport.
When a commercial property is empty, property owners can still be liable for business rates on that property. The rates payable on empty commercial property differ depending on the location and size of the property. In England, property owners are entitled to a 3-month exemption from business rates for empty commercial properties, after which full rates apply. In Wales, the exemption period is extended to 6 months, while in Scotland and Northern Ireland, the exemption period is 3 months.
After the initial exemption period, property owners are required to pay the full business rates on their empty commercial property. This can be a significant financial burden for property owners, especially if the property remains vacant for an extended period. In some cases, property owners may be eligible for additional relief or discounts on their business rates to help alleviate the financial strain. However, the availability of these relief options varies depending on the location and circumstances of the property.
One option for reducing the rates payable on empty commercial property is through the Small Business Rate Relief scheme, which provides relief to businesses with a rateable value below a certain threshold. Property owners who qualify for this relief can receive a discount on their business rates, which can help lower the overall cost of owning an empty commercial property. Other relief options may also be available for certain types of properties or situations, so it’s essential for property owners to explore all available options to find the best solution for their specific circumstances.
Property owners may also consider ways to minimize their liability for business rates on empty commercial property. For example, if the property is undergoing significant refurbishment or structural changes, property owners may be eligible for a temporary exemption from business rates under the “Section 44A” relief scheme. This relief allows property owners to postpone paying business rates until the property is ready to be occupied again, providing some financial relief during the renovation period.
Another option for reducing the rates payable on empty commercial property is by leasing the property to a charity or community group. In some cases, property owners can qualify for a 100% relief on their business rates if they lease their empty commercial property to a registered charity or community group. This can be a win-win situation for property owners and the charitable organization, as it allows the property to be put to good use while also reducing the financial burden on the property owner.
Overall, understanding the rates payable on empty commercial property is essential for property owners to make informed decisions about their investments. By exploring all available relief options and strategies for minimizing business rates, property owners can navigate the challenges of owning empty commercial property and make the most of their investments. Whether through relief schemes, temporary exemptions, or leasing options, there are strategies available to help property owners reduce the financial impact of business rates on their vacant commercial properties.