When it comes to owning and managing commercial property, one of the costs that owners need to be aware of is the rates payable on empty commercial property. Rates, also known as business rates or non-domestic rates, are a tax that is paid by the owners or occupiers of non-residential properties in the UK. These rates are set by the local government and help fund local services such as garbage collection, street cleaning, and road maintenance.
One of the aspects of business rates that can catch property owners off guard is the fact that they must still pay rates on properties that are empty. This means that even if a commercial property is vacant and generating no income, the owner is still responsible for paying business rates. This can be a significant financial burden for property owners, especially during times when the property market is slow and finding tenants becomes challenging.
The policy of charging rates on empty commercial property is in place to discourage property owners from leaving their properties vacant for extended periods of time. The idea is to incentivize owners to actively seek tenants or find alternative uses for their properties in order to generate income and contribute to the local economy. However, this can be frustrating for property owners who are already struggling to find tenants and are burdened with additional costs.
It is important for property owners to understand how rates payable on empty commercial property are calculated. The rateable value of a property is determined by the Valuation Office Agency (VOA) and is based on the rental value of the property. The rateable value is then multiplied by the uniform business rate (UBR) set by the local government to determine the amount of rates payable. If a property is empty, the owner may be entitled to certain exemptions or discounts on the rates payable, depending on the circumstances.
For example, properties that are undergoing major structural repairs or are in need of renovation may qualify for a temporary exemption from paying rates. This exemption typically lasts for up to three months, with the possibility of an extension for a further three months if the property is still not let. Similarly, properties that are being actively marketed for rent or sale may also qualify for a 50% discount on the rates payable for up to three months.
Despite these exemptions and discounts, the rates payable on empty commercial property can still add up to a considerable amount over time. Property owners must factor in these costs when budgeting for their properties and consider the financial implications of keeping a property vacant for an extended period.
There are also ways in which property owners can reduce the amount of rates payable on empty commercial property. For example, owners can explore the option of appealing the rateable value of their property if they believe it has been overvalued by the VOA. This can result in a lower rateable value and therefore a lower amount of rates payable.
Another option for property owners is to consider leasing the property on a short-term basis to charities or community groups. Properties that are leased to qualifying organizations can qualify for an 80% discount on the rates payable. This can be a win-win situation for both the property owner and the organization leasing the property, as it can provide temporary income for the owner while also benefiting the community.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners. It is important for owners to understand how these rates are calculated and to explore all possible exemptions, discounts, and alternatives to mitigate the costs. By being proactive and exploring different options, property owners can better manage the rates payable on their empty commercial properties and avoid unnecessary financial strain.