Commercial property owners are often faced with the burden of paying rates on empty properties, which can add a significant financial strain on their investment. These rates, also known as business rates, are a tax levied by local authorities on non-domestic properties. The amount payable can vary depending on a number of factors such as the location of the property, its rateable value, and the current business rates multiplier set by the government.
The idea behind business rates is to ensure that all properties contribute towards the cost of local services such as schools, roads, and waste collection. However, when a commercial property sits empty, the owner is still required to pay a portion of these rates, even though they are not generating any rental income.
The rates payable on empty commercial property can be a complex issue for property owners to navigate. It is important to understand how these rates are calculated and what options are available to minimize the financial impact.
Rateable Value
The rateable value of a property is determined by the Valuation Office Agency (VOA) and represents an estimate of the annual rental value of the property at a specific date. This figure is used to calculate the business rates payable on the property.
The rateable value is reassessed every five years, and the next revaluation is set to take place in 2023. It is important for property owners to keep track of changes in the rateable value of their property, as this can have a direct impact on the amount of rates they are required to pay.
Empty Property Relief
In some cases, property owners may be eligible for empty property relief, which provides a temporary exemption from paying business rates on empty properties. The length of the exemption period can vary depending on the type of property and the local authority in which it is located.
Empty property relief is typically granted for a maximum period of three or six months, after which the full rates become payable. However, there are certain exceptions to this rule, such as industrial properties which can receive a 100% exemption for the first six months and 50% exemption thereafter.
It is important for property owners to check with their local authority to see if they qualify for empty property relief and to understand the specific criteria that need to be met in order to qualify for the exemption.
Planning and Development
One way to minimize the financial impact of paying rates on empty commercial property is to consider the potential for planning and development. By investing in refurbishment or redevelopment of the property, owners may be able to increase its rateable value and attract new tenants.
Many local authorities offer incentives for property owners to bring empty properties back into use, such as business rate discounts or grants for renovation work. By exploring these options, property owners may be able to offset the cost of paying rates on an empty property and generate rental income in the long term.
Appealing the Rateable Value
If property owners believe that the rateable value of their property is incorrect, they have the right to appeal the assessment through the VOA. This process involves providing evidence to support the claim that the rateable value is too high or inaccurate.
It is important for property owners to seek professional advice when appealing the rateable value of their property, as the process can be complex and time-consuming. However, a successful appeal can result in a significant reduction in the rates payable on the property, providing a valuable cost-saving opportunity for owners.
Conclusion
rates payable on empty commercial property can present a significant financial burden for property owners, especially in challenging economic times. By understanding how these rates are calculated and exploring options such as empty property relief, planning and development, and appealing the rateable value, owners can minimize the impact of paying rates on empty properties and ensure that their investment remains profitable in the long term.
For property owners facing the challenge of rates payable on empty commercial property, it is important to seek professional advice and explore all available options to mitigate the financial impact and maximize the potential of their investment.