When it comes to owning and managing commercial property, there are various expenses that property owners need to be mindful of. One such cost that often catches property owners off guard is the rates payable on empty commercial property. These rates can significantly impact a property owner’s bottom line, making it crucial to understand how they are calculated and what options are available to mitigate the financial burden.
The rates payable on empty commercial property, also known as empty property rates or vacant property rates, are taxes that are levied on commercial properties that are unoccupied. These rates are separate from the regular business rates that are charged on occupied commercial properties, and they are designed to encourage property owners to bring vacant properties back into productive use.
The calculation of rates payable on empty commercial property can vary depending on the local authority where the property is located. In some areas, property owners are granted a period of exemption from empty property rates, typically ranging from three to six months. After this initial period, property owners are required to pay the full rates on the empty property, which can sometimes be up to 100% of the property’s rateable value.
The rateable value of a property is determined by the Valuation Office Agency (VOA) and is based on the property’s rental value. This value is used as the basis for calculating the business rates that a property owner is required to pay. When a property becomes vacant, the rateable value remains the same, but the property owner may be eligible for certain exemptions or reliefs that can reduce the amount of rates payable on the empty property.
One common exemption that property owners may qualify for is the Small Business Rate Relief, which provides relief on empty property rates for small businesses with a rateable value below a certain threshold. Property owners may also be eligible for Charity Rate Relief if the property is owned by a registered charity and is used for charitable purposes. Additionally, there are provisions for Hardship Relief for property owners who are experiencing financial difficulties and are struggling to pay the empty property rates.
In some cases, property owners may be able to apply for temporary occupation relief, which allows them to temporarily occupy the property for a short period without being liable for empty property rates. This can be a useful option for property owners who are actively seeking tenants for their vacant property and need time to secure a new lease agreement.
Another option for property owners facing high empty property rates is to consider leasing the property on a short-term basis. By entering into a short-term lease agreement with a tenant, property owners can generate some income from the property and potentially qualify for relief on the empty property rates. It is important for property owners to carefully consider the terms of the lease agreement to ensure that they are complying with legal requirements and are not forfeiting their rights to claim relief on the empty property rates.
Property owners may also consider investing in their vacant property to make it more attractive to potential tenants. By carrying out improvements or renovations to the property, property owners can increase its rental value and make it more marketable in the competitive commercial real estate market. This can help property owners to secure tenants more quickly and reduce the amount of time that the property remains vacant, ultimately lowering the rates payable on the empty property.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners, but there are options available to help mitigate this cost. By understanding how these rates are calculated and exploring potential exemptions, reliefs, and strategies for reducing empty property rates, property owners can better manage this expense and protect their investment in commercial real estate.