Empty rates commercial property, also known as business rates, can be a significant financial burden for property owners. These rates apply to any non-residential properties that are empty for an extended period of time, and they can add up quickly if not properly managed. In this article, we will explore what empty rates commercial property are, how they are calculated, and provide some tips on how property owners can minimize these costs to better protect their investment.
What are empty rates commercial property?
Empty rates commercial property are taxes levied on non-residential properties that are empty for a certain period of time. These rates are charged by local authorities in the UK and are meant to discourage property owners from leaving their properties vacant for extended periods. The idea behind these rates is to incentivize property owners to either occupy or rent out their properties rather than letting them sit empty.
How are empty rates commercial property Calculated?
Empty rates commercial property are calculated based on the rateable value of the property. The rateable value is assessed by the Valuation Office Agency (VOA) and is used to determine how much tax a property owner must pay. For properties that are empty, the rates are generally set at 50% of the normal rateable value after three months of vacancy. After six months of vacancy, the rates increase to 100% of the rateable value.
For example, if a property has a rateable value of £20,000 and has been empty for four months, the property owner would be required to pay 50% of £20,000 in empty rates. If the property remains vacant for another two months, the rates would increase to 100% of £20,000.
Tips for Minimizing empty rates commercial property Costs
Property owners can take several steps to minimize the costs associated with empty rates commercial property. Here are some tips to consider:
1. Utilize Temporary Occupiers: One way to avoid paying empty rates is to have temporary occupants in the property. This can include pop-up shops, artists or small businesses looking for short-term space. By having these temporary occupants, property owners can avoid being charged the full empty rates while also potentially earning additional income.
2. Negotiate with Local Authorities: Property owners can also try negotiating with local authorities for relief on their empty rates. Some areas offer exemptions or discounts for certain types of properties, such as buildings undergoing renovation or properties in certain designated areas. It is worth reaching out to the local council to see if any relief options are available.
3. Consider Refurbishment or Repurposing: Another option to minimize empty rates commercial property costs is to consider refurbishing or repurposing the property. By making improvements to the property or changing its use, property owners may be able to qualify for exemptions or discounts on their empty rates. Additionally, by revitalizing the property, owners may attract new tenants or buyers, ultimately reducing the time the property remains vacant.
4. Renting Out the Property: Of course, the most straightforward way to avoid paying empty rates is to rent out the property. By finding tenants to occupy the space, property owners can not only avoid the empty rates but also generate rental income. It may be beneficial to work with a commercial real estate agent to help find suitable tenants for the property.
5. Keep an Eye on Vacancy Periods: Property owners should closely monitor their properties’ vacancy periods to avoid being charged the higher rate of empty rates. By actively seeking tenants or temporary occupants, property owners can ensure that their properties do not remain empty for extended periods.
In conclusion, empty rates commercial property can be a significant financial burden for property owners, but there are ways to minimize these costs. By utilizing temporary occupants, negotiating with local authorities, considering refurbishment or repurposing, renting out the property, and monitoring vacancy periods, property owners can take proactive steps to reduce the impact of empty rates on their investments. By staying informed and proactive, property owners can better protect their properties and finances.