Empty rates 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. This can be a considerable cost, especially if the property remains vacant for an extended period of time.
In this article, we will explore what empty rates commercial property are, how they are calculated, and share some tips for property owners to mitigate the impact of empty rates.
What are empty rates commercial property?
Empty rates commercial property are taxes that are charged on non-domestic properties that are empty. These rates are collected by local councils and are used to fund local services such as schools, roads, and waste collection. The amount of empty rates commercial property that a property owner must pay varies depending on the rateable value of the property.
How are empty rates commercial property Calculated?
Empty rates commercial property are calculated based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA) and is used to calculate the business rates that are owed on a property. The rateable value is based on the open market rental value of the property as of a specific date.
The business rates multiplier is then applied to the rateable value to determine the amount of business rates that are due. The multiplier is set annually by the government and is the same across England, Scotland, and Wales.
If a commercial property is empty, the owner may still be required to pay business rates at a reduced rate. The amount of the reduction varies depending on the length of time that the property has been empty. For example, in England, properties that have been empty for three months or less are exempt from business rates, while properties that have been empty for more than six months are charged at the full rate.
How to Mitigate the Impact of empty rates commercial property
There are several strategies that property owners can use to mitigate the impact of empty rates commercial property. One option is to apply for an empty property relief. This relief, which is offered by local councils, allows property owners to receive a discount on their business rates if their property is empty for a certain period of time.
Another option is to consider leasing the property on a short-term basis while searching for a long-term tenant. This can help to generate some income from the property and reduce the amount of empty rates that are owed.
Property owners can also consider investing in their property to make it more attractive to potential tenants. This could include refurbishing the property, improving its energy efficiency, or adding amenities such as parking or bike storage. By making the property more desirable, property owners may be able to attract tenants more quickly and reduce the amount of time that the property is empty.
Additionally, property owners can consider negotiating with the local council to reach a payment plan for their empty rates. Some councils may be willing to work with property owners to come up with a more manageable payment schedule.
It is also important for property owners to stay informed about changes to empty rates commercial property regulations. The rules around empty rates can change, so it is important to keep up-to-date with any new developments that could impact the amount of empty rates that are owed.
In conclusion, empty rates commercial property can be a significant financial burden for property owners. Understanding how empty rates are calculated and exploring strategies to mitigate their impact can help property owners navigate this challenging aspect of owning a commercial property. By staying informed and taking proactive steps, property owners can work towards reducing the financial impact of empty rates on their bottom line.