When it comes to owning commercial property, the costs can often be a significant factor in determining the success or failure of a business. One such cost that can catch many property owners off guard is the business rates on empty property. These rates can add up quickly and can have a substantial impact on a business’s bottom line if not properly managed. In this article, we will take a closer look at what business rates on empty property are, how they are calculated, and what property owners can do to minimize their impact.
business rates on empty property are a tax imposed by the government on commercial properties that are not being used. The idea behind these rates is to encourage property owners to make productive use of their properties rather than leaving them vacant. The rates are designed to be a financial incentive for property owners to either rent out their properties or sell them to someone who will make use of them. However, this can often be easier said than done, as finding a tenant or buyer for a commercial property can be a lengthy and challenging process.
The amount of business rates on empty property is calculated based on the rateable value of the property. This rateable value is determined by the Valuation Office Agency (VOA) and is based on the property’s estimated rental value as of a certain date. The rateable value is then multiplied by the appropriate multiplier set by the government to determine the actual amount of business rates that the property owner must pay. It’s important to note that different properties can have different rateable values and multipliers, so it’s crucial for property owners to understand how these values are determined for their specific property.
One thing that property owners can do to minimize the impact of business rates on empty property is to take advantage of the various exemptions and reliefs that are available. For example, if a property owner is actively marketing their property for rent or sale, they may be eligible for a three-month initial exemption from business rates. Additionally, if a property owner is making structural changes to their property that render it unfit for occupation, they may be eligible for a temporary exemption from business rates. It’s essential for property owners to explore these exemptions and reliefs to see if they qualify, as they can help significantly reduce the amount of business rates that must be paid.
Another option that property owners have is to consider leasing their property on a short-term basis to a charity or community interest group. Properties that are let to these types of organizations can be eligible for an 80% discount on business rates. This can be a win-win situation for property owners, as it allows them to earn some rental income while also reducing their business rates liability. Property owners should consider reaching out to local charities and community groups to see if there are any opportunities for collaboration in this regard.
If a property owner is struggling to find a tenant or buyer for their property, they may also want to consider seeking professional advice from a commercial property agent or consultant. These professionals can provide valuable insights and guidance on how to market the property effectively and attract potential tenants or buyers. They may also have access to a network of contacts that can help expedite the process of finding a suitable occupier for the property. While working with a commercial property agent or consultant may incur additional costs, the potential savings on business rates in the long run may outweigh these expenses.
In conclusion, business rates on empty property can be a significant financial burden for property owners, but there are steps that can be taken to minimize their impact. By understanding how business rates are calculated, exploring exemptions and reliefs, and seeking professional advice when needed, property owners can better manage their business rates liability and ultimately improve their bottom line. It’s essential for property owners to stay informed about their options and take proactive steps to address any challenges they may face in this area.