Commercial property owners are often faced with the dilemma of paying rates on empty commercial properties. This can be a significant financial burden, especially if the property remains vacant for an extended period. Understanding the rates payable on empty commercial property is crucial for property owners to effectively manage their finances and minimize their costs. In this article, we will discuss the implications of rates payable on empty commercial property and provide insights on how property owners can mitigate this expense.
Rates payable on commercial properties are taxes levied by local authorities to fund public services and infrastructure. These rates are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value of a property is an estimate of its open market rental value on a designated date, usually every five years. The local authority then uses this rateable value to calculate the rates payable by the property owner.
When a commercial property is empty, property owners are still liable to pay rates on the property. This is known as empty property rates or vacant property rates. The rationale behind this is to discourage property owners from leaving their properties vacant and to incentivize them to bring them back into productive use. Empty property rates are charged at 100% of the normal rates payable on the property, which can be a substantial amount for property owners to bear.
Property owners may be eligible for exemptions or reliefs on empty property rates, depending on the circumstances. For instance, if a property is undergoing substantial repair or structural alterations, property owners may be eligible for a temporary exemption on empty property rates for a specified period. This gives property owners the opportunity to carry out necessary works on the property without incurring additional financial hardship.
Another relief that property owners may be eligible for is the small business rate relief. This relief is aimed at supporting small businesses and reduces the rates payable on eligible properties with a rateable value below a certain threshold. Property owners should check with their local authority to see if they qualify for this relief and how they can apply for it.
Property owners can also consider leasing or renting out their empty commercial properties to generate income and offset the costs of rates payable. By finding suitable tenants for their properties, property owners can not only generate rental income but also potentially qualify for business rates relief if the property is occupied by a small business. It is essential for property owners to conduct thorough due diligence on potential tenants to ensure that they are reputable and financially stable to meet their rental obligations.
Moreover, property owners should consider other strategies to minimize the costs of rates payable on empty commercial properties. This may include negotiating with the local authority to agree on a payment plan or exploring options for appealing the rateable value of the property. Property owners can also seek professional advice from chartered surveyors or business rates specialists to help them navigate the complexities of rates payable on empty commercial properties and identify cost-saving opportunities.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners. Understanding the implications of empty property rates and exploring available reliefs and exemptions are crucial steps for property owners to effectively manage their costs. By considering strategies such as leasing out the property, applying for reliefs, and seeking professional advice, property owners can mitigate the financial impact of rates payable on empty commercial properties and make informed decisions to optimize their property investments.