When it comes to owning commercial property, one of the less glamorous aspects that owners must consider is the rates on empty commercial property. These rates can be a significant financial burden for property owners, especially when the property is not generating any income. In this article, we will explore what rates on empty commercial property are, how they are calculated, and some strategies for dealing with them.
rates on empty commercial property, also known as business rates, are a tax that is levied on non-residential properties in the UK. 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 estimated open market rental value of the property as of a specific date. Property owners are required to pay business rates regardless of whether the property is occupied or vacant.
One of the challenges of rates on empty commercial property is that they can be quite high, especially in high-demand areas or for properties with a high rateable value. Many property owners find themselves in a difficult situation when they are unable to find tenants for their properties and are forced to pay these rates out of pocket. In some cases, the rates on empty commercial property can even exceed the rental income that the property would generate if it were occupied.
So, how are rates on empty commercial property calculated? The rateable value of the property is multiplied by the uniform business rate (UBR) to determine the amount of business rates owed. The UBR is set annually by the government and is the same across England, Wales, and Scotland. However, there are certain exemptions and reliefs available that can reduce the amount of business rates owed on empty commercial property.
For example, properties that are empty for a short period of time may qualify for a three-month exemption from paying business rates. This can help property owners avoid paying rates on a property that is only temporarily vacant. Additionally, properties that are unoccupied and require substantial repair work may be eligible for a 100% discount on business rates for up to 12 months. These exemptions and reliefs can provide some much-needed financial relief for property owners who are struggling to cover the costs of rates on empty commercial property.
In addition to exemptions and reliefs, there are some strategies that property owners can use to deal with rates on empty commercial property. One option is to explore the possibility of renting out the property on a short-term basis, such as through pop-up shops or temporary events. This can help generate some income from the property while also potentially attracting long-term tenants.
Another strategy is to negotiate with the local council for a reduction in business rates based on the property’s actual rental value. Property owners can provide evidence of market conditions, such as comparable rental rates in the area, to support their case for a lower rateable value. While this process can be time-consuming and challenging, it can result in significant savings on rates on empty commercial property.
Property owners should also consider the long-term implications of rates on empty commercial property when making decisions about their properties. For example, if a property is consistently vacant and generating little income, it may be worth exploring alternative uses for the property or even selling it to avoid the ongoing burden of business rates. Ultimately, property owners need to carefully weigh the costs and benefits of holding onto a vacant property versus taking action to minimize the financial impact of rates on empty commercial property.
In conclusion, rates on empty commercial property can be a significant financial burden for property owners, especially when the property is not generating any income. Understanding how these rates are calculated, as well as exploring exemptions, reliefs, and strategies for dealing with them, can help property owners navigate this challenging aspect of owning commercial property. By taking proactive measures and carefully considering their options, property owners can minimize the impact of rates on empty commercial property and make informed decisions about their properties.