Understanding Rates Payable On Empty Commercial Property

When it comes to owning or leasing commercial property, one important aspect that property owners need to be aware of is the rates payable on empty commercial property. These rates, also known as business rates, are taxes levied on non-domestic properties by local authorities in the United Kingdom. This article will delve into what rates payable on empty commercial property are, how they are calculated, and some strategies that property owners can use to manage them effectively.

Business rates are a significant cost that property owners need to take into consideration when owning a commercial property. These rates are charged by local authorities to help fund local services such as schools, roads, and waste collection. They are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is an estimate of how much rent the property could fetch on the open market at a given date.

When a commercial property is empty, the property owner is still liable to pay business rates. This can pose a significant financial burden, especially if the property remains vacant for an extended period. However, there are some exemptions and reliefs available to property owners that can help reduce the rates payable on empty commercial property.

One of the exemptions available to property owners is the empty property rate relief. This relief provides a 100% discount on business rates for the first three months that a property is empty. After the initial three-month period, the property owner will have to pay the full rates unless they qualify for another exemption or relief. Some properties may also be eligible for a further three months of relief if they are industrial properties or listed buildings.

Another relief that property owners can apply for is the unoccupied property rate relief. This relief provides a 100% discount on business rates for properties that are unoccupied for a specified period due to circumstances such as major repairs or redevelopment. The length of the relief period varies depending on the type of property, but it can provide significant savings for property owners.

In addition to these reliefs, there are some strategies that property owners can use to manage the rates payable on empty commercial property. One option is to negotiate with the local authority for a reduced rate based on the property’s actual value. This can be particularly effective for properties that have been vacant for a long time and are struggling to attract tenants.

Property owners can also consider letting the property out on a short-term basis to avoid paying the full rates. By renting out the property even for a short period, property owners can qualify for the small business rate relief, which provides a discount on business rates for qualifying properties with low rateable values.

Another strategy that property owners can use is to consider appealing the rateable value of the property. If the property owner believes that the rateable value is incorrect or has changed due to factors such as market conditions or structural changes, they can appeal to the VOA to have it reassessed. A lower rateable value can result in lower rates payable on the property.

Overall, rates payable on empty commercial property are a significant cost that property owners need to factor into their financial planning. By understanding the exemptions and reliefs available, as well as implementing effective strategies to manage the rates, property owners can minimize the impact of business rates on their bottom line. With careful planning and negotiation, property owners can navigate the complexities of rates payable on empty commercial property and ensure that they are paying a fair and reasonable amount for their properties.