When it comes to owning commercial property, there are many expenses to consider beyond just the initial purchase price. One of the ongoing costs that property owners often face is business rates, which can be a significant financial burden, especially when a property sits empty. In this article, we will explore the implications of business rates on empty commercial property and provide some tips for managing this cost effectively.
Business rates are a tax that business owners must pay on the non-domestic property they occupy. This tax helps fund local services such as schools, roads, and waste disposal. The amount of business rates that must be paid is calculated based on the rateable value of the property, which is set by the Valuation Office Agency.
When a commercial property is vacant, property owners may still be liable to pay business rates. The government’s rationale for this policy is to prevent property owners from intentionally leaving properties empty to avoid paying taxes. However, this can be a significant financial burden for property owners who are struggling to find tenants or need to temporarily shut down their operations.
To address this issue, the government offers some relief for property owners facing empty commercial properties. In England, for example, property owners are entitled to a three-month exemption from business rates for properties that have been empty for three months or less. After this initial period, property owners must pay the full business rates unless they qualify for additional reliefs.
One such relief is the “Empty Property Rate Relief,” which provides a 100% exemption from business rates for certain types of properties. For example, newly built properties are eligible for this relief for the first 18 months after completion. Additionally, certain industrial properties and properties with a rateable value below a certain threshold may also qualify for this relief.
Another option for property owners is to apply for “Hardship Relief” if they are struggling to pay their business rates on empty properties. This relief is granted on a case-by-case basis and is typically reserved for property owners who can demonstrate financial hardship.
If you are a property owner facing empty commercial properties and struggling to manage your business rates, there are some steps you can take to mitigate this financial burden. One option is to consider leasing out your property on a short-term basis to temporary tenants or pop-up shops. By doing so, you may be able to generate some income from your property and potentially qualify for relief from empty property rates.
Another option is to negotiate with your local council to arrange for a payment plan for your business rates. Many councils are willing to work with property owners to come up with a manageable payment schedule, especially in cases of financial hardship.
Additionally, it is essential to stay informed about any changes to government policies regarding business rates on empty properties. By staying up-to-date on the latest developments, you can make informed decisions about how to manage this cost effectively.
In conclusion, business rates on empty commercial property can be a significant financial burden for property owners. However, there are options available for mitigating this cost, such as applying for relief, leasing out the property on a short-term basis, or negotiating a payment plan with the local council. By taking proactive steps to manage your business rates effectively, you can alleviate some of the financial strain associated with owning empty commercial properties.