When it comes to owning or managing commercial properties, there are a variety of costs to consider beyond just the mortgage or rental income. One of these costs that often catches property owners off guard is the rates payable on empty commercial property. In this article, we will explore what rates payable on empty commercial property are, how they are calculated, and what steps property owners can take to minimize these costs.
rates payable on empty commercial property, often referred to simply as empty rates, are the business rates that property owners must pay on a commercial property that is unoccupied. These rates are separate from any other property taxes or utility bills and are specifically designed to encourage property owners to occupy or redevelop empty properties. The idea behind empty rates is to prevent property owners from leaving commercial spaces vacant for extended periods of time, which can have a negative impact on the surrounding area and local economy.
Empty rates are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is an estimate of the property’s rental value on a certain date and is used to calculate the business rates payable on the property. When a commercial property becomes empty, it is given a temporary exemption from paying business rates for the first three months. After this initial three-month period, property owners are required to pay 100% of the empty rates unless the property falls into certain categories that qualify for a reduced rate.
One way that property owners can reduce the amount of empty rates payable on their commercial property is by taking advantage of the Government’s scheme known as the Business Rates Relief for Empty Properties. This scheme allows property owners to claim relief on their empty rates for a set period of time, typically between three and six months, depending on the size and type of the property. Property owners must apply for this relief through their local council, and eligibility criteria may vary depending on the location of the property.
Another option for property owners looking to reduce their empty rates is to actively market the property for sale or lease. By demonstrating that they are actively seeking to occupy or redevelop the property, property owners may be able to qualify for a reduced rate of empty rates. This can be done by advertising the property through commercial real estate agencies, listing it on property websites, or hosting open houses for potential tenants or buyers.
Property owners may also be able to reduce their empty rates payable by carrying out repairs or improvements to the property. The VOA takes into account the state of the property when determining the rateable value, so making upgrades or repairs to the property can help lower the amount of empty rates owed. Property owners should keep detailed records of any work done on the property, as these may be required when applying for a reduced rate.
In some cases, property owners may be able to apply for a complete exemption from paying empty rates on their commercial property. Properties that are undergoing major refurbishment or are in a state of disrepair may qualify for an exemption. Property owners must provide evidence to the VOA to support their claim for an exemption, such as building permits, invoices for construction work, or reports from building inspectors.
Overall, rates payable on empty commercial property can be a significant expense for property owners. However, by understanding how these rates are calculated and taking proactive steps to reduce them, property owners can minimize the impact on their bottom line. Whether through taking advantage of government relief schemes, actively marketing the property, making improvements, or applying for exemptions, property owners have a range of options available to help reduce their empty rates payable and make their commercial properties more attractive to potential tenants or buyers.