Empty rates commercial property, also known as business rates for vacant premises, can often prove to be a significant burden for property owners. These rates are charged on commercial properties that are empty for a certain period of time, and they can have a significant impact on a property owner’s finances. In this article, we will delve into the details of empty rates commercial property, discussing what they are, how they are calculated, and what property owners can do to minimize their impact.
What Are empty rates commercial property?
Empty rates commercial property is a form of tax that is levied on commercial properties that are empty for a prolonged period of time. The idea behind this tax is to encourage property owners to bring their empty properties back into use, thus stimulating economic activity and preventing properties from sitting vacant for extended periods.
Empty rates are calculated based on the rateable value of the property in question. The rateable value is determined by the Valuation Office Agency (VOA) and represents an estimate of the rental value of the property. Properties with a rateable value of £2,900 or less are exempt from empty rates, while properties with a rateable value above this threshold are subject to the tax.
How Are empty rates commercial property Calculated?
Empty rates commercial property are typically calculated at the same rate as normal business rates. As of April 2020, this rate stands at 50% of the normal business rates for properties with a rateable value below £51,000, and 100% for properties with a rateable value above this threshold.
For example, if a property has a rateable value of £60,000, the property owner would be required to pay the full business rates on the property if it is empty for an extended period. This can add up to a significant annual cost, making it crucial for property owners to take proactive steps to avoid empty rates.
What Can Property Owners Do to Minimize the Impact of Empty Rates?
There are several strategies that property owners can employ to minimize the impact of empty rates commercial property on their finances. One common approach is to actively market the property for rent or sale, as this can demonstrate to the local council that the owner is making efforts to bring the property back into use.
Property owners can also consider applying for an exemption from empty rates if they can demonstrate that the property is undergoing repairs or redevelopment work. In some cases, certain types of properties, such as agricultural buildings or listed buildings, may be exempt from empty rates regardless of their rateable value.
Another option for property owners is to explore the possibility of leasing the property to a charity organization, as properties occupied by charities are exempt from empty rates. This can be a win-win situation, as the property owner avoids empty rates while also supporting a charitable cause.
It is also important for property owners to stay informed about changes to empty rates legislation, as the rules can vary depending on the location and type of property in question. Seeking advice from a professional property consultant or tax advisor can help property owners navigate the complexities of empty rates commercial property and develop a strategy to minimize their impact.
In conclusion, empty rates commercial property can present a significant financial challenge for property owners, particularly in the current economic climate. By understanding how empty rates are calculated, exploring exemption options, and staying informed about changes to the legislation, property owners can take proactive steps to minimize the impact of empty rates on their finances. With careful planning and strategic decision-making, property owners can navigate the complexities of empty rates commercial property and protect their investment in the long term.