When it comes to owning commercial property, one of the expenses that must be considered is the rates that are imposed on empty properties. These rates, also known as business rates, are local taxes that are levied on the non-domestic properties such as shops, offices, warehouses, and factories. They are a significant cost that property owners must factor into their financial planning. In this article, we will explore the concept of rates on empty commercial property and understand how they are calculated.
Business rates on empty commercial properties can be a contentious issue for property owners, as they must pay these rates even when the property is not generating any income. This can be a challenging situation, especially for landlords who may be struggling to find tenants or are in between tenancies.
In the UK, rates on empty commercial property are calculated based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA), which is an executive agency of HM Revenue and Customs. It represents the rental value of the property as of a specific date set by the VOA. The rateable value is then used to calculate the business rates payable on the property.
It is important to note that the rules governing rates on empty commercial property vary depending on the location and type of property. In England, for example, businesses are generally required to pay full rates on empty properties. However, there are certain exemptions and reliefs that may apply in certain circumstances. These include:
1. Small business rate relief: This relief is available to businesses that only occupy one property with a rateable value below a certain threshold. They may be eligible for a discount on their business rates.
2. Empty property relief: This relief may apply to properties that are empty for a specific period of time, such as three months for industrial properties and six months for offices and shops. During this period, the property owner may receive a discount on their rates.
3. Charitable and community amateur sports club relief: Charities and amateur sports clubs may be eligible for relief on their business rates if they occupy a property that is primarily used for charitable purposes.
4. Transitional relief: This relief is available to businesses that experience a significant increase in their rates due to a revaluation of their property. It is designed to provide a gradual increase in rates over a specified period.
It is important for property owners to be aware of these exemptions and reliefs, as they can help reduce the financial burden of rates on empty commercial property. It is advisable to consult with a professional advisor or local council to determine eligibility for these reliefs and how to apply for them.
In some cases, property owners may choose to challenge the rateable value of their property if they believe it is inaccurate. This process, known as a business rates appeal, involves submitting evidence to the VOA to support a change in the rateable value. If successful, the property owner may see a reduction in their business rates.
It is also worth noting that rates on empty commercial property can have a significant impact on the financial viability of a property investment. Property owners must carefully consider the potential costs of rates on empty properties when purchasing or leasing commercial properties. It is advisable to conduct thorough due diligence and financial analysis to assess the overall costs and risks involved.
In conclusion, rates on empty commercial property are an important consideration for property owners. Understanding how these rates are calculated and the exemptions and reliefs that may apply can help mitigate the financial impact of owning empty properties. By staying informed and seeking professional advice when needed, property owners can effectively manage the costs associated with rates on empty commercial property.