When it comes to owning commercial property, one of the biggest concerns for investors and business owners is the issue of business rates. These rates are essentially a tax that is levied on non-domestic properties, including offices, shops, and warehouses. One particular area of concern for property owners is the business rates that are imposed on empty commercial properties.
business rates on empty commercial property can have a significant impact on property owners, especially those who are struggling to find tenants or are in between leases. In some cases, these rates can make it financially unviable for property owners to keep their properties empty, leading to pressure to find a new tenant as quickly as possible. In this article, we will explore the implications of business rates on empty commercial property and discuss some strategies that property owners can use to mitigate the impact of these rates.
Business rates are a tax that is calculated based on the rateable value of a property. The rateable value is determined by the Valuation Office Agency (VOA) and is essentially an estimate of the property’s open market rental value on a specific date. The business rates are then calculated by multiplying the rateable value by the national multiplier, which is set by the government each year.
One of the key concerns for property owners when it comes to business rates on empty commercial property is the fact that these rates can apply even if a property is vacant. In most cases, properties are exempt from business rates for the first three months after they become empty. However, after this initial period, the owner will be liable to pay full business rates on the property.
This can put significant financial strain on property owners, especially if they are struggling to find a new tenant for their property. In some cases, property owners may be forced to reduce their asking rent in order to attract tenants, which can further impact their rental income and ability to cover their overheads.
In recent years, the government has taken steps to address some of the concerns around business rates on empty commercial property. For example, in April 2017, the government introduced new legislation that allows local authorities to offer discretionary business rates relief to owners of empty commercial properties. This relief can be used to reduce or waive business rates on empty properties for a limited period of time.
While this discretionary relief can provide some much-needed assistance to property owners, it is not a long-term solution to the issue of business rates on empty commercial property. Property owners must still find ways to attract tenants and generate income from their properties in order to avoid paying full business rates on empty properties.
There are several strategies that property owners can use to mitigate the impact of business rates on empty commercial property. One option is to explore the possibility of leasing the property on a short-term basis to a pop-up shop or temporary tenant. This can help to generate some income from the property while also making it more attractive to potential long-term tenants.
Another option is to consider applying for business rates relief from the local authority. This can involve providing evidence of the property’s vacancy and demonstrating efforts to find a new tenant. If successful, this relief can help to reduce the financial burden of business rates on empty properties.
Property owners can also explore the option of appealing the rateable value of their property with the VOA. If they can demonstrate that the rateable value is incorrect or outdated, they may be able to secure a reduction in their business rates liability.
In conclusion, business rates on empty commercial property can have a significant impact on property owners. However, by exploring alternative leasing options, applying for business rates relief, and appealing the rateable value of their property, property owners can take steps to mitigate the financial burden of these rates. As the property market continues to evolve, it is essential for property owners to stay informed about changes to business rates legislation and take proactive steps to manage their business rates liability on empty commercial properties.