When it comes to owning commercial property, there are many expenses to consider beyond just the purchase price. One significant cost that many property owners may not immediately think about is the rates payable on empty commercial property. These rates, also known as business rates, can be a substantial financial burden for property owners, especially if the property remains vacant for an extended period of time. In this article, we will delve into what rates payable on empty commercial property are, how they are calculated, and what property owners can do to minimize the impact of these rates on their finances.
rates payable on empty commercial property are essentially taxes that property owners must pay to the local government for owning a commercial property that is not being used or occupied. These rates are separate from other property taxes and are intended to encourage property owners to either use their properties or put them to productive use rather than letting them sit vacant. The logic behind this is that vacant properties can have a negative impact on the local community, such as attracting crime, lowering property values, and reducing foot traffic for neighboring businesses.
Calculating rates payable on empty commercial property can be a complex process, as it varies depending on the location of the property and its rateable value. The rateable value is an estimate of the open market rental value of a property at a given time, as determined by the local government’s Valuation Office Agency (VOA). The rates payable are then calculated by multiplying the rateable value by the uniform business rate (UBR), which is set by the government each year. The UBR is expressed as a pence in the pound figure, and it can vary depending on the region and size of the property.
Property owners should be aware that rates payable on empty commercial property can be a significant financial burden, especially if the property remains vacant for an extended period of time. In some cases, the rates payable can be as high as 100% of the property’s rateable value, which can quickly add up to thousands of pounds per year. This is why it is crucial for property owners to take active steps to minimize the impact of these rates on their finances.
One common strategy for reducing rates payable on empty commercial property is to apply for empty property relief. This relief allows property owners to receive a discount on their rates payable if their property has been vacant for a certain period of time. The length of time that the property must be vacant before qualifying for empty property relief varies depending on the region, but it is typically around three months. Property owners should check with their local government to see if they qualify for this relief and how they can apply for it.
Another strategy for reducing rates payable on empty commercial property is to consider leasing the property out on a short-term basis. By doing so, property owners can generate rental income from the property, which can help offset the rates payable. Additionally, leasing the property out can help to deter squatters, vandals, and other unwanted visitors from occupying the property.
Property owners can also consider appealing the rateable value of their property to the VOA if they believe it has been overvalued. The VOA may reassess the rateable value of the property, which can result in a lower rates payable for the property owner. However, it is important for property owners to be aware that appealing the rateable value can be a lengthy and complex process, and there is no guarantee that the VOA will agree to lower the rateable value.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners, especially if the property remains vacant for an extended period of time. Property owners should take active steps to minimize the impact of these rates on their finances, such as applying for empty property relief, leasing the property out on a short-term basis, and appealing the rateable value of the property. By doing so, property owners can ensure that they are not paying more than necessary in rates payable and can potentially turn their vacant property into a productive asset for their financial benefit.