Business rates can be a significant expense for property owners, especially when a property is left empty. In the UK, empty commercial properties are subject to business rates after a specified period of vacancy. These rates can put a strain on property owners who are already facing financial challenges, which is why finding ways to legally avoid or reduce business rates on empty property is essential. Whether you own a single commercial property or manage a portfolio of properties, it is important to explore various strategies to mitigate the impact of business rates. In this article, we will discuss some effective strategies that property owners can use to avoid or reduce business rates on empty property.
1. Temporary occupation or use
One way to avoid business rates on empty property is to temporarily occupy or use the space. By finding a short-term tenant or using the property for a temporary purpose, such as hosting pop-up events or exhibitions, you can take advantage of the empty property rates relief. In the UK, properties that are used for certain purposes, such as industrial exhibitions, can qualify for exemptions from business rates for a specified period.
2. Reconfigure the property
Another strategy to avoid business rates on empty property is to reconfigure the space for a different use. For example, if a retail property is struggling to attract tenants, the owner can consider converting the space into a mixed-use property with residential units. By changing the usage of the property, the owner may be able to qualify for exemptions or reductions in business rates. It is important to check with the local authorities to ensure compliance with regulations and eligibility for relief schemes.
3. Appeal the rateable value
Property owners have the right to challenge the rateable value assigned to their properties by the Valuation Office Agency (VOA). If you believe that the rateable value of your property is too high, you can appeal to have it reassessed. By providing evidence of market trends, rental values, or physical changes to the property, you may be able to secure a lower rateable value, which can result in reduced business rates. It is advisable to seek professional advice from a chartered surveyor or property consultant to navigate the appeal process successfully.
4. Vacant property rate relief
In certain circumstances, property owners may be eligible for vacant property rate relief, which provides a 100% exemption from business rates for a specified period. To qualify for this relief, the property must be unoccupied and have been so for a certain period, typically three months for industrial properties and six months for other types of commercial properties. The relief period may vary depending on the location and specific circumstances of the property, so it is essential to check with the local council for eligibility criteria.
5. Develop a business rates mitigation strategy
Property owners should develop a comprehensive business rates mitigation strategy to minimize the impact of empty property rates. This strategy may include a combination of the aforementioned tactics, as well as proactive management of the property portfolio. By staying informed about changes in legislation, relief schemes, and market trends, property owners can make informed decisions to reduce business rates and increase the profitability of their properties. Engaging with professional advisors, such as tax experts and property consultants, can also provide valuable insights and guidance on navigating the complexities of business rates.
In conclusion, avoiding business rates on empty property requires a proactive and strategic approach from property owners. By exploring options such as temporary occupation, property reconfiguration, rateable value appeals, vacant property rate relief, and developing a comprehensive mitigation strategy, property owners can mitigate the financial burden of business rates. It is important to stay informed about regulatory changes and seek professional advice to make informed decisions that align with the financial goals of the property portfolio. With careful planning and strategic management, property owners can successfully avoid or reduce business rates on empty property, ultimately maximizing the value and profitability of their assets.