Empty rates on commercial property, also known as “business rates,” can be a significant financial burden for property owners. When a commercial property is empty, the owner is still required to pay business rates to the local council – a cost that can add up quickly and put a strain on finances.
In this article, we will explore what empty rates commercial property are, how they are calculated, and some strategies for dealing with this expense.
empty rates commercial property, often referred to simply as “empty rates,” are taxes imposed on non-residential properties that are vacant. These rates are collected by local councils to fund local services and infrastructure projects. The rationale behind empty rates is to encourage property owners to keep their properties occupied, thus stimulating economic activity and preventing the blight that can come from vacant buildings.
The empty rates commercial property regime was introduced in 2008 as part of the government’s plan to reform the business rates system. Under this regime, owners of empty commercial properties are still required to pay a portion of the business rates they would have paid if the property were occupied. The rateable value of the property, as determined by the Valuation Office Agency, is used as the basis for calculating empty rates.
The calculation of empty rates commercial property can be complex and varies depending on the location and type of property. In general, the rates are calculated based on a percentage of the property’s rateable value, with the exact percentage determined by the government. For example, in England, the empty rates for commercial properties are typically charged at 3/4 of the full rate after three months of vacancy.
While empty rates commercial property can be a significant financial burden for property owners, there are some strategies that can help mitigate this expense. One common approach is to actively market the property for rent or sale. By finding a tenant or buyer for the property, owners can avoid or reduce the amount of empty rates they have to pay.
Another strategy for dealing with empty rates commercial property is to negotiate with the local council for a temporary reduction or exemption. In some cases, councils may be willing to offer relief for properties that are undergoing refurbishment or redevelopment, as these activities can contribute to the local economy and help bring the property back into use.
Property owners can also explore the option of appealing the rateable value of their property to lower their empty rates liability. If the rateable value of the property is inaccurate or outdated, owners can file a formal appeal with the Valuation Office Agency to have it reassessed. A lower rateable value would result in lower empty rates payments.
In addition to these strategies, property owners should be proactive in managing their vacant properties to avoid unnecessary empty rates expenses. This may include securing the property against vandalism and squatting, maintaining the upkeep of the building, and exploring alternative uses for the space while it is vacant.
In conclusion, empty rates commercial property can be a significant financial burden for property owners, but there are strategies that can help mitigate this expense. By understanding how empty rates are calculated, actively marketing the property, negotiating with the council, appealing the rateable value, and proactively managing the property, owners can reduce the impact of empty rates on their finances. It is essential for property owners to stay informed and proactive in managing their vacant properties to navigate the challenges of empty rates commercial property effectively.