Empty commercial property can be a headache for landlords and property owners. Not only does it represent lost potential revenue, but it can also incur additional costs in the form of business rates. Business rates, also known as non-domestic rates, are taxes based on the rateable value of commercial properties. These rates are set by the government and local councils and can have a significant impact on the financial viability of owning empty commercial property. In this article, we will take a closer look at the implications of rates on empty commercial property and how property owners can navigate this challenge.
One of the biggest concerns for owners of empty commercial property is the liability for business rates. In the past, properties that remained empty were exempt from paying business rates for the first three months. However, in April 2008, the government introduced changes to the empty property rates relief scheme. Under the new rules, most empty commercial properties are subject to full business rates after a 3-month exemption period. This change was implemented to encourage property owners to bring empty properties back into use and discourage the hoarding of vacant commercial space.
The impact of business rates on empty commercial property can be substantial. For owners with multiple vacant properties, the financial burden of paying business rates on each property can quickly add up. This can put a strain on cash flow and make it difficult to cover other expenses related to maintaining and managing the properties. In some cases, property owners may even be forced to sell or dispose of vacant properties to avoid the ongoing costs of business rates.
One way that property owners can mitigate the impact of business rates on empty commercial property is to explore available reliefs and exemptions. There are certain circumstances in which properties may qualify for a reduction or exemption from business rates. For example, properties that are undergoing major repairs or structural changes may be eligible for a temporary exemption from rates. It is important for property owners to familiarize themselves with the eligibility criteria for these reliefs and exemptions to take advantage of potential cost savings.
Another option for property owners facing high business rates on empty commercial property is to consider alternative uses for the space. Rather than leaving the property vacant, owners can explore opportunities to lease or rent out the space for short-term uses such as pop-up shops, events, or storage. By generating some income from the property, owners can offset the costs of business rates and keep the space occupied until a more permanent tenant is secured.
In some cases, property owners may decide to challenge the rateable value of their empty commercial property in order to reduce their business rates liability. The rateable value is used to calculate how much a property owner is required to pay in business rates. By appealing the rateable value, property owners can potentially lower their rates bill and save money on their empty commercial property. It is important to seek professional advice when challenging the rateable value to ensure that the process is carried out effectively and in compliance with regulations.
The issue of rates on empty commercial property is a complex and challenging one for property owners to navigate. However, by understanding the implications of business rates and exploring available reliefs, exemptions, and strategies, owners can minimize the financial impact of owning vacant commercial properties. Whether through temporary uses, rate challenges, or other creative solutions, there are ways for property owners to manage the costs of business rates and maximize the potential of their empty commercial properties.