Empty commercial properties can be a headache for property owners. Not only do they miss out on potential rental income, but they also have to deal with the rates payable on these vacant spaces. In this article, we will delve into the intricacies of rates payable on empty commercial property, highlighting the key factors that determine the amount property owners have to pay.
rates payable on empty commercial property, commonly referred to as empty property rates or vacant rates, are a tax levied by local authorities in the United Kingdom on properties that are unoccupied. These rates serve as a disincentive for property owners to keep their commercial spaces vacant for extended periods of time. The logic behind this tax is to encourage property owners to actively seek tenants for their properties, thereby reducing the number of empty properties in the market.
The rates payable on empty commercial properties are determined by the rateable value of the property. The rateable value is an estimate of the annual rental value of a property as determined by the Valuation Office Agency (VOA). This value is used as the basis for calculating business rates, which are paid by the occupiers of commercial properties. However, when a property becomes vacant, the responsibility for paying business rates falls on the property owner, hence the need for empty property rates.
Property owners are required to pay empty property rates at a rate of 100% of the normal business rates if the property has been vacant for three months or more. This means that property owners are effectively paying double the amount in rates for empty commercial properties compared to occupied ones. The 100% rate is intended to serve as a penalty for keeping properties vacant and to incentivize property owners to actively market their spaces to potential tenants.
There are certain exemptions and reliefs available to property owners when it comes to empty property rates. For instance, properties with a rateable value of less than £2,900 are exempt from empty property rates for as long as they remain vacant. This is to provide relief to small business owners who may struggle to find tenants for their properties in a challenging market. Additionally, newly constructed properties are also exempt from empty property rates for the first three months after completion, giving property owners some leeway to secure tenants for their spaces.
Another important factor that can impact the rates payable on empty commercial property is the length of time the property has been vacant. Local authorities may offer varying levels of relief on empty property rates based on how long the property has been unoccupied. For instance, some local authorities may offer a 50% discount on empty property rates for the first three months of vacancy, with the rate increasing to 100% thereafter. This is intended to give property owners some breathing room to find tenants for their spaces before being hit with the full amount of empty property rates.
It is important for property owners to be aware of the rates payable on empty commercial property and to factor these costs into their financial planning. Failure to pay empty property rates can result in hefty fines and legal action by the local authority. Property owners should also explore all available exemptions and reliefs to minimize the financial burden of empty property rates.
In conclusion, rates payable on empty commercial property are an important consideration for property owners. Understanding the factors that determine the amount of empty property rates and exploring available exemptions and reliefs can help property owners navigate the challenges of keeping their commercial spaces vacant. By actively seeking tenants and managing vacant properties effectively, property owners can minimize the impact of empty property rates on their finances and ensure that their properties remain viable investments in the long run.