Navigating the Impact of Business Rates on Empty Commercial Property
When it comes to owning and managing commercial property, one of the key considerations that landlords and business owners must take into account is the payment of business rates. These rates are a tax imposed by local authorities on non-domestic properties, including shops, offices, warehouses, and other types of commercial buildings. However, what happens when a commercial property sits empty? How are business rates affected, and what steps can property owners take to navigate the impact of business rates on empty commercial property?
The Issue of Empty Properties
Empty commercial properties present a unique challenge for property owners when it comes to business rates. The government levies business rates on all non-domestic properties to help fund local services such as schools, roads, and waste collection. However, when a property is vacant, it ceases to generate rental income for the owner, making it difficult to cover the costs associated with business rates.
In the past, property owners were granted an automatic exemption from business rates for the first three months that a property was empty. After this initial period, the full business rates would kick in, putting a financial strain on property owners who were unable to find tenants quickly. However, recent changes to the law have altered the way in which empty properties are treated for business rates purposes.
Changes to Business Rates on Empty Properties
In 2008, the government introduced new legislation that changed the way in which business rates on empty properties are calculated. Under the new law, property owners are still entitled to a three-month exemption from business rates when a property becomes vacant. However, after this initial period, the property owner will be required to pay the full business rates unless certain conditions are met.
One of the key changes introduced by the government was the removal of the automatic exemption for empty properties. Instead, property owners must now apply for a specific exemption in order to avoid paying business rates on a vacant property. This exemption is known as the empty property rate relief, and it is granted at the discretion of the local authority.
Navigating the Impact of Business Rates on Empty Commercial Property
As a property owner, navigating the impact of business rates on empty commercial property can be a challenging task. However, there are several steps that you can take to minimize the financial burden of business rates on vacant properties.
1. Apply for Empty Property Rate Relief
If your commercial property is empty and you are struggling to cover the costs of business rates, it is important to apply for empty property rate relief. This exemption can provide a significant reduction in your business rates bill, making it easier to manage the financial implications of owning a vacant property. To apply for empty property rate relief, you will need to contact your local authority and provide them with detailed information about the property in question.
2. Appeal the Rateable Value
In some cases, the rateable value of a commercial property may be inflated, leading to higher business rates bills than necessary. If you believe that the rateable value of your property is incorrect, you have the right to appeal to the Valuation Office Agency (VOA) to have it reassessed. By successfully appealing the rateable value of your property, you can significantly reduce your business rates liability and save money in the long run.
3. Consider Temporary Use or Occupation
Another option for property owners struggling with business rates on empty commercial property is to consider temporary use or occupation of the property. By renting out the property on a short-term basis or allowing a pop-up shop to operate in the space, you can generate rental income and potentially qualify for business rates relief under certain circumstances. Temporary use or occupation can help to mitigate the financial impact of owning a vacant property while also attracting potential tenants for a long-term lease.
In conclusion, navigating the impact of business rates on empty commercial property requires careful planning and proactive management. By applying for empty property rate relief, appealing the rateable value of your property, and considering temporary use or occupation, property owners can effectively deal with the challenges of owning a vacant property. With the right strategies in place, property owners can minimize the financial burden of business rates and create opportunities for future tenancy and rental income.