When it comes to owning and managing commercial real estate, one of the many costs that property owners need to consider is business rates These rates are a tax that businesses in the UK pay on the non-domestic properties they occupy However, what many property owners may not realize is that even vacant properties are subject to business rates, which can have a significant financial impact.
Business rates are calculated based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA) The VOA assesses the rental value of a property every five years and this valuation is used to calculate the business rates that need to be paid For vacant properties, the rateable value is still assessed, and owners are liable to pay these rates even if the property is unoccupied.
The issue of business rates on vacant properties has been a contentious one, with many property owners feeling that it is unfair to be charged for a property that is not generating any income However, the government has defended the policy, arguing that the rates help to deter property owners from keeping properties empty for extended periods of time.
One of the key concerns for property owners with vacant properties is the financial burden of paying business rates on top of other expenses such as maintenance and security costs In some cases, these rates can be so high that they make it financially unviable for owners to keep the property vacant, leading them to either lease or sell the property at a loss.
There are, however, some exemptions and reliefs available to property owners with vacant properties For example, properties with a rateable value of less than £2,900 are exempt from paying business rates on their vacant property Additionally, properties that are undergoing major renovation or structural alterations may qualify for a relief known as the Empty Property Rate Relief, which provides a 100% discount on business rates for the first three months after the property becomes vacant.
Another option for property owners is to apply for the Unoccupied Property Rates Relief, which can provide a 50% discount on business rates for properties that have been empty for more than three months business rates vacant property. This relief is only available for a maximum of 12 months, after which the property owner must resume paying the full business rates.
Despite these exemptions and reliefs, the issue of business rates on vacant properties remains a significant concern for property owners The financial impact of these rates can be substantial, especially for owners with multiple vacant properties or properties that have been on the market for an extended period of time.
In recent years, there have been calls for reform of the business rates system to address the issue of vacant properties Some have suggested implementing a sliding scale of rates for vacant properties, where the rates decrease the longer the property remains unoccupied Others have proposed changing the way in which rateable values are assessed for vacant properties to better reflect their true market value.
Property owners are also exploring alternative ways to mitigate the impact of business rates on vacant properties For example, some owners are considering repurposing their vacant properties for temporary uses such as pop-up shops, events, or community projects in order to generate some income and qualify for relief under the Small Business Rate Relief scheme.
In conclusion, the issue of business rates on vacant properties is a complex and challenging one for property owners to navigate While there are exemptions and reliefs available, the financial burden of paying these rates can still be significant, especially for owners with multiple vacant properties As the debate continues on how to reform the business rates system, property owners will need to carefully consider their options and explore alternative strategies to minimize the impact of these rates on their vacant properties.