When it comes to owning commercial property, there are many costs and expenses that come with it. One of the expenses that property owners need to be aware of is the rates payable on empty commercial property. These rates, also known as business rates, can become a financial burden if not managed properly. In this article, we will discuss what rates payable on empty commercial property are, how they are calculated, and some strategies to mitigate their impact on property owners.
Business rates are taxes that are levied on most non-domestic properties, including commercial properties, by local governments in the UK. These rates are used to fund local services such as the police, fire department, and garbage collection. The rates payable on empty commercial property are a specific type of business rates that apply to properties that are vacant and not being used for any income-generating activities.
The rates payable on empty commercial property are calculated based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA), which is an executive agency of HM Revenue & Customs. The VOA assesses the rateable value of a property based on factors such as its size, location, and rental value. Once the rateable value is determined, the local government applies a multiplier to calculate the actual rates payable.
The rates payable on empty commercial property can vary depending on the location and type of property. In some cases, property owners may be eligible for exemptions or discounts on their rates. For example, properties that are newly built or recently refurbished may be eligible for a temporary exemption from rates payable. Additionally, properties that are empty for a certain period of time due to circumstances beyond the owner’s control, such as a natural disaster or government order, may also be eligible for relief from rates payable.
Despite the potential exemptions and discounts, rates payable on empty commercial property can still be a significant expense for property owners. In some cases, property owners may struggle to pay these rates, especially if their properties remain vacant for an extended period of time. This can create a financial burden on property owners and may even hinder their ability to lease or sell the property.
To mitigate the impact of rates payable on empty commercial property, property owners can consider several strategies. One option is to actively market the property for lease or sale to generate income and eliminate the need to pay rates on an empty property. By finding a tenant or buyer for the property, property owners can not only generate income but also reduce or eliminate their rates payable.
Another strategy is to consider negotiating with the local government for a reduction in rates payable. Property owners can appeal to the VOA to reassess the rateable value of the property or request a reduction in rates based on specific circumstances, such as economic hardship or property depreciation. By demonstrating a valid reason for a reduction in rates, property owners may be able to lower their rates payable and alleviate some of the financial burden.
Property owners can also explore other options such as temporary uses for the property to generate income and avoid paying rates on an empty property. Temporary uses could include hosting events, pop-up shops, or creative workspaces in the property to generate income while waiting for a permanent tenant or buyer. By exploring creative uses for the property, property owners can generate income and reduce the financial impact of rates payable on empty commercial property.
In conclusion, rates payable on empty commercial property can be a significant expense for property owners. Understanding how these rates are calculated and exploring strategies to mitigate their impact can help property owners manage their financial obligations more effectively. By actively marketing the property, negotiating for reductions in rates, and exploring temporary uses for the property, property owners can alleviate the financial burden of rates payable on empty commercial property.