When it comes to owning commercial property, there are many costs and responsibilities that come along with it. One of those costs that property owners need to be aware of is the rates payable on empty commercial property. These rates can often catch owners off guard, as they continue to accrue even when the property is not generating any income. In this article, we will explore what rates payable on empty commercial property are, how they are calculated, and what property owners can do to minimize these costs.
rates payable on empty commercial property, also known as vacant property rates or business rates, are charges imposed by local authorities on commercial properties that are unoccupied. These rates are separate from the regular business rates that a property owner would pay if the property was tenanted. The purpose of these rates is to incentivize property owners to keep their properties occupied and actively contributing to the local economy.
The rates payable on empty commercial property are calculated based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA) and represents the rental value of the property at a specific date. The local authority then applies a multiplier, known as the national non-domestic multiplier, to the rateable value to calculate the amount of rates payable.
The national non-domestic multiplier is set by the government each year and is the same for all properties in England, regardless of their location. In some cases, the local authority may also apply a higher rate for properties that have been unoccupied for an extended period of time.
Property owners should be aware that rates payable on empty commercial property can be a significant expense, especially for larger properties in prime locations. These rates can add up quickly and become a financial burden for property owners who are struggling to find tenants or are in the process of refurbishing their properties.
There are, however, some exemptions and reliefs available to property owners that can help reduce the amount of rates payable on empty commercial property. One of the most common reliefs is the empty property rate relief, which provides a 100% discount on rates for the first three months that a property is empty. After the initial three-month period, the property owner may be eligible for a further 50% discount on rates payable.
Another relief that property owners can take advantage of is the charitable rate relief, which provides a 80% discount on rates for properties that are occupied by a registered charity. This relief can be a significant cost-saving for charities that operate out of commercial properties.
Property owners should also be aware of the government’s temporary COVID-19 relief measures, which were put in place to support businesses during the pandemic. These measures include a 100% discount on rates for retail, hospitality, and leisure properties for the 2021-2022 financial year.
In addition to these reliefs, property owners can also take steps to minimize the amount of rates payable on empty commercial property. One option is to consider leasing the property on a short-term basis to pop-up shops, events, or temporary tenants. This can help generate some income from the property while it is vacant and may also provide an opportunity to showcase the property to potential long-term tenants.
Property owners can also explore options for re-purposing the property to attract new tenants or customers. This could involve making structural or cosmetic changes to the property, rebranding it, or targeting a different market segment. By making the property more attractive to potential tenants, property owners may be able to reduce the amount of time that the property sits empty and, therefore, the rates payable on it.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners. However, there are exemptions, reliefs, and strategies available that can help reduce these costs and make owning a commercial property more financially viable. By understanding how rates payable on empty commercial property are calculated and exploring options for minimizing these costs, property owners can better manage their expenses and maximize the potential of their properties.