Empty rates on commercial property can be a significant financial burden for property owners and investors. In the UK, empty rates are taxes that property owners must pay on vacant commercial properties. These rates can add up quickly, leaving property owners with hefty bills to pay until they find new tenants or buyers for their properties. In this article, we will explore the ins and outs of empty rates commercial property, including what they are, how they are calculated, and some tips on how to minimize these costs.
What are empty rates commercial property?
Empty rates commercial property, also known as vacant rates or business rates, are taxes that property owners must pay on commercial properties that are empty or unoccupied. These rates are charged by local authorities and are meant to discourage property owners from leaving properties vacant for extended periods. The idea behind empty rates is to incentivize property owners to keep their properties occupied and contributing to the local economy.
How are Empty Rates Calculated?
Empty rates on commercial property are calculated based on the rateable value of the property. The rateable value is an estimate of the property’s rental value as determined by the Valuation Office Agency (VOA). The empty rates payable on a property are usually a percentage of the rateable value, and this percentage can vary depending on the location of the property and local regulations.
For the first three months that a commercial property is empty, property owners are usually given a grace period and do not have to pay empty rates. However, after this initial period, empty rates can become a significant expense for property owners. In some cases, empty rates can amount to thousands of pounds per month, especially for properties with high rateable values.
How to Minimize Empty Rates Costs
Property owners and investors who are facing hefty empty rates bills may be wondering how they can minimize these costs. There are several strategies that property owners can consider to reduce the financial impact of empty rates on their business. Here are a few tips:
1. Negotiate with the Local Authority: Property owners may be able to negotiate with the local authority to reduce their empty rates bill. This could involve proving that efforts are being made to market the property for lease or sale, or demonstrating that the property is undergoing renovation or repair work. Local authorities may be willing to provide relief on empty rates in certain circumstances.
2. Explore Exemptions and Reliefs: There are some exemptions and reliefs available to property owners who are facing empty rates bills. For example, small business rate relief may be available to properties with a rateable value below a certain threshold. Property owners should research the options available to them and see if they qualify for any exemptions or reliefs.
3. Consider Temporary Occupiers: Property owners may also consider allowing temporary occupiers to use their vacant commercial properties. This could include pop-up shops, short-term rentals, or temporary office space. While this may not completely eliminate empty rates costs, it can help to offset some of the expenses while the property is vacant.
4. Market the Property Effectively: Property owners should actively market their vacant commercial properties to attract potential tenants or buyers. This could involve working with real estate agents, advertising the property online and in local publications, and attending networking events to promote the property. The sooner a new occupier is found, the sooner empty rates costs can be avoided.
In conclusion, empty rates on commercial property can be a significant financial burden for property owners and investors. Understanding how these rates are calculated and exploring strategies to minimize costs can help property owners navigate this challenging situation. By negotiating with the local authority, exploring exemptions and reliefs, considering temporary occupiers, and effectively marketing the property, property owners can take steps to reduce the impact of empty rates on their bottom line.