When it comes to owning commercial property, there are a multitude of expenses that landlords must account for. One such expense that often catches property owners off guard is the rates payable on empty commercial property. These rates can add up quickly, eating into potential profits and creating an additional financial burden for landlords. Understanding how these rates are calculated and what measures can be taken to potentially reduce them is crucial for any property owner.
rates payable on empty commercial property, also known as business rates, are taxes levied by local authorities on non-residential properties. These rates are meant to contribute towards the cost of local services such as waste collection, police and fire services, and road maintenance. In the case of empty commercial properties, landlords are still required to pay these rates even if the property is not generating any income.
The rateable value of a commercial property is determined by the Valuation Office Agency (VOA) in England, the Scottish Assessors Association in Scotland, and the Land and Property Services in Northern Ireland. This value is based on the market rent that could be expected for the property on a certain date, known as the antecedent valuation date. Once the rateable value is determined, the local authority calculates the rates payable based on a multiplier set by the government.
For empty commercial properties, landlords are subject to additional rates payable. In England, for example, landlords are required to pay 100% of the normal rates for the first three months the property remains empty. After this initial period, the rates are increased to 200% of the normal rates until the property is reoccupied. This significant increase can be a major financial burden for landlords, especially if the property remains vacant for an extended period of time.
There are, however, some exemptions and reliefs available to help offset the rates payable on empty commercial property. One such relief is the Small Business Rates Relief, which provides eligible landlords with a discount on their rates if the rateable value of their property is below a certain threshold. Additionally, landlords who are actively seeking to reoccupy their property may be eligible for Empty Property Relief, which provides a 100% discount on rates for the first three months the property is empty, followed by a 50% discount for the next three months.
In some cases, landlords may choose to apply for an appeal of the rateable value assigned to their property in order to potentially reduce the rates payable. This process involves providing evidence to the VOA or local assessor that the rateable value is inaccurate, which could result in a reduction of the property’s rates. However, it’s important to note that this process can be lengthy and may not always result in a favorable outcome.
Another option for landlords looking to reduce the rates payable on empty commercial property is to consider leasing the property on a short-term basis. By leasing the property for a short period of time, landlords may be able to qualify for relief under the Small Business Rates Relief scheme, which could significantly reduce the rates payable. Additionally, actively seeking to reoccupy the property may help landlords qualify for Empty Property Relief, further reducing the financial burden of empty rates.
In conclusion, rates payable on empty commercial property can be a significant financial burden for landlords, especially if the property remains vacant for an extended period of time. Understanding how these rates are calculated and what relief options are available is crucial for property owners looking to minimize their expenses and maximize their profits. By taking advantage of available reliefs, appealing the rateable value, or considering short-term leasing options, landlords can potentially reduce the rates payable on their empty commercial property and alleviate some of the financial strain associated with property ownership.