When a commercial property sits empty, it can be a burden on its owner in more ways than one Not only is there lost potential for rental income, but there is also the issue of business rates on vacant property These rates can be a significant financial strain on business owners, and understanding how they are calculated and applied is crucial for those with vacant properties.
Business rates are essentially a tax on non-residential properties in the UK They are based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA) The rateable value is an estimate of the annual rent a property could fetch on the open market Businesses are required to pay business rates to their local council, which uses the money to fund local services.
When a property is vacant, business rates still apply This can come as a shock to property owners who may have assumed that they would get a reprieve from paying rates while the property is empty In fact, empty commercial properties are subject to a 100% rate for the first three months they are vacant After this initial period, the rate drops to 50%, but even this reduced rate can be a hefty expense for property owners.
The rationale behind charging business rates on vacant properties is to discourage property owners from leaving their buildings empty The government wants to incentivize owners to put their properties back into use in order to revitalize communities and boost economic activity While this may be a noble goal, it can be a significant financial burden for property owners who may be struggling to find tenants or who are in the process of renovating a property for future use.
There are some exemptions and reliefs available for vacant properties, but they are limited in scope For example, newly built properties are exempt from business rates for the first 18 months after they are completed And properties with a rateable value of less than £2,900 are exempt from business rates altogether business rates vacant property. There are also some additional reliefs available for specific types of properties, such as those used for charitable purposes.
Property owners who are struggling to pay business rates on their vacant properties may be able to apply for hardship relief This relief is granted on a case-by-case basis and is intended to provide temporary assistance to owners who are experiencing financial difficulties However, hardship relief is not a long-term solution, and property owners should explore other options for dealing with their business rates.
One possible solution for property owners with vacant properties is to explore ways to reduce their rateable value This can be done by appealing the valuation set by the VOA Property owners can submit evidence to the VOA showing that the rateable value of their property is inaccurate, which could result in a lower valuation and lower business rates However, appealing a valuation can be a time-consuming and complex process, and property owners may need to seek professional advice to navigate the system effectively.
Another option for property owners is to explore alternative uses for their vacant properties that could qualify for a different rate of business rates For example, converting a commercial property into residential units could result in a lower rate of business rates or even exemption from business rates altogether Property owners should research the relevant regulations and guidelines to determine if a change of use could benefit their financial situation.
In conclusion, business rates on vacant properties can be a significant financial burden for property owners However, there are options available for reducing or mitigating this expense Property owners should explore all available avenues, including exemptions, reliefs, appeals, and changes of use, in order to find the best solution for their individual circumstances By understanding how business rates are calculated and applied, property owners can make informed decisions about how to deal with this unavoidable expense.