For many property owners, having empty commercial spaces can be a financial burden. Not only are they missing out on potential rental income, but they also have to deal with the costs of maintaining an unoccupied property. One of the major expenses that come with owning an empty commercial property is the rates that owners have to pay. In this article, we will delve into everything you need to know about rates on empty commercial property.
What are Rates on Empty Commercial Property?
rates on empty commercial property, also known as non-domestic rates or business rates, are taxes that property owners have to pay to local authorities. These rates are based on the rateable value of the property and are used to fund local services such as schools, roads, and waste collection.
In the United Kingdom, commercial properties are assigned a rateable value by the Valuation Office Agency (VOA). This value is based on the estimated open market rental value of the property as of a specific date. The local authority then uses this rateable value to calculate the business rates that the property owner has to pay.
Why Do Property Owners Have to Pay Rates on Empty Commercial Property?
Property owners are required to pay rates on empty commercial property to discourage property owners from leaving their properties vacant for extended periods of time. By imposing rates on empty properties, local authorities aim to incentivize property owners to either rent out their properties or make productive use of them.
In addition, rates on empty commercial property help fund local services that benefit the community as a whole. Therefore, property owners are expected to contribute to these services even if their properties are not generating any income.
How Are Rates on Empty Commercial Property Calculated?
The calculation of rates on empty commercial property varies depending on the location and value of the property. In England, for example, properties with a rateable value of less than £2,900 are usually exempt from paying business rates. Properties with a rateable value between £2,900 and £12,000 are eligible for small business rate relief, which means they receive a discount on their rates.
For properties with a rateable value above £12,000, business rates are calculated based on the rateable value of the property. The exact rates are set by the government and local authorities and are subject to annual adjustments.
What Can Property Owners Do to Minimize Rates on Empty Commercial Property?
There are several strategies that property owners can employ to minimize the rates they have to pay on empty commercial property. One common approach is to apply for exemptions or reliefs that may be available in their area. For example, some local authorities offer empty property relief, which provides a temporary discount on rates for properties that have been empty for a certain period of time.
Property owners can also consider leasing out their empty commercial property on a short-term basis to organizations or businesses that need temporary space. By generating temporary rental income, property owners can offset some of the costs of paying rates on their empty property.
Another option for property owners is to explore alternative uses for their empty commercial property. For example, they could consider converting the property into residential units, coworking spaces, or storage facilities. By repurposing the property, owners may be able to generate income and reduce the rates they have to pay.
Conclusion
rates on empty commercial property can be a significant financial burden for property owners. However, by understanding how rates are calculated and exploring strategies to minimize them, property owners can make better-informed decisions about their empty properties. Whether it’s applying for exemptions, leasing out the property, or considering alternative uses, there are various ways that property owners can maximize the potential of their empty commercial spaces. By taking proactive steps, property owners can not only reduce the costs of owning an empty property but also contribute to the vibrancy of their local community.