Running a business comes with a plethora of responsibilities and expenses that business owners need to factor into their budgets. One of the costs that often catch businesses off guard is the business rates they have to pay on their properties. For business owners who own empty listed buildings, the rules around business rates can be even more complex and confusing. In this article, we will delve into the impact of business rates on empty listed buildings.
Listed buildings hold a special place in our history and culture, as they are recognized for their architectural or historical significance. These buildings are protected by law, meaning any changes or alterations to the building must be approved by the local planning authority. However, owning a listed building, especially an empty one, comes with its own set of challenges, including the burden of paying business rates on a property that is not generating any income.
Business rates are taxes that business owners have to pay on most non-domestic properties, including shops, offices, warehouses, and factories. The amount of business rates levied on a property is determined by the rateable value of the property, which is assessed by the Valuation Office Agency (VOA). For businesses occupying a property, the business rates are usually based on the rental value of the property. However, for empty properties, the rules around business rates can be quite different.
Empty properties are subject to business rates just like occupied properties, but the rules regarding the rates on empty properties are designed to encourage property owners to bring their properties back into use. In England, business owners are entitled to a three-month exemption from business rates for their empty properties, after which they are required to pay the full rates. For industrial properties, the exemption period is extended to six months. Once the exemption period expires, property owners are typically required to pay 100% of the business rates.
However, for listed buildings, the rules around business rates on empty properties can be more lenient. Property owners of listed buildings in England are entitled to 100% exemption from business rates for the first 12 months the property remains empty, after which they are required to pay 100% of the business rates. This exemption is in place to help alleviate the financial burden on property owners who may face additional costs associated with owning and maintaining a listed building.
While the 12-month exemption period for listed buildings may provide some relief for property owners, the requirement to pay 100% of the business rates after the exemption period ends can still be a significant financial strain for many businesses. In some cases, property owners may find it difficult to generate income from a listed building, especially if extensive renovations or repairs are needed to bring the building up to code.
Property owners of listed buildings may also face challenges when it comes to securing tenants or buyers for their properties, as the restrictions on listed buildings can deter potential occupants. This can result in lengthy periods of vacancy, during which property owners are still required to pay the full business rates. The financial impact of paying business rates on an empty listed building can be substantial, especially for small businesses or property owners who may already be struggling financially.
Despite the challenges that come with owning and maintaining an empty listed building, there are ways that property owners can mitigate the financial impact of business rates. One option is to apply for business rates relief, which may be available in certain circumstances, such as when the property is undergoing renovation or repair work. Property owners can also explore options for leasing the property to temporary occupants, such as pop-up shops or events, to generate some income and reduce the burden of paying full business rates.
In conclusion, the impact of business rates on empty listed buildings can be significant for property owners who are already grappling with the challenges of owning and maintaining a historic property. While the 12-month exemption period for listed buildings provides some relief, the requirement to pay full business rates after the exemption period ends can still be a financial strain for many businesses. Property owners should explore all available options for reducing the financial burden of business rates on empty listed buildings, from seeking business rates relief to exploring temporary leasing options. By understanding the rules and regulations surrounding business rates on empty listed buildings, property owners can better navigate the complexities of owning a historic property.