When it comes to owning commercial property, there are various costs and fees that need to be considered One of the significant expenses that property owners often overlook is business rates on vacant property These rates can have a significant impact on the bottom line of property owners and can make owning vacant property a costly affair In this article, we will discuss what business rates on vacant property are, how they are calculated, and some strategies for minimizing their impact.
Business rates are a tax that is levied on most non-domestic properties in the UK These rates are charged by local councils and are used to help fund local services such as roads, schools, and waste collection Business rates are calculated based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA) The rateable value is an estimate of the property’s open market rental value on a specific date The business rates are then calculated by applying a multiplier set by the government to the rateable value.
When a commercial property becomes vacant, it is still liable for business rates unless it falls under certain exemptions The first three months that a property is empty are exempt from business rates However, after the initial three months, the property owner is required to pay the full rate unless the property is eligible for additional relief This can be a significant burden for property owners, especially if they are struggling to find tenants for their property.
One strategy that property owners can use to reduce the impact of business rates on vacant property is to explore the various reliefs and exemptions that are available business rates vacant property. For example, if a property is undergoing major repairs or structural changes, the owner may be eligible for a 100% relief on their business rates for a period of up to 12 months This can provide some much-needed financial relief during times when the property is not generating any income.
Another option for property owners is to consider letting the property on a short-term basis to avoid paying business rates on a vacant property By entering into a temporary lease agreement with a tenant, the property owner can transfer the liability for business rates to the tenant for the duration of the lease This can be a win-win situation for both parties, as the property owner avoids paying business rates while the tenant gets access to a commercial property for a short period.
Property owners can also explore the option of appealing the rateable value of their property if they believe it has been overvalued The VOA assesses rateable values based on rental values, but they may not always accurately reflect the true market value of a property By providing evidence of comparable properties in the area or any unique characteristics of their property that may affect its value, property owners may be able to successfully reduce their rateable value and lower their business rates.
In conclusion, business rates on vacant property can be a significant financial burden for property owners However, by understanding how these rates are calculated and exploring the various reliefs and exemptions available, property owners can minimize the impact of business rates on their bottom line Whether it involves taking advantage of temporary lease agreements, appealing rateable values, or seeking relief during major renovations, there are strategies that property owners can use to navigate the complexities of business rates on vacant property By being proactive and informed, property owners can better manage this aspect of owning commercial property and ensure that they are not overburdened by unnecessary costs.