When it comes to owning commercial property, there are many costs to consider, including the rates payable on empty properties. These rates can often be a significant financial burden for property owners, especially when the property sits vacant for an extended period of time. Understanding how rates are calculated and what options are available for reducing or avoiding these costs can help property owners make informed decisions about their investments.
rates payable on empty commercial property, also known as empty property rates, are a type of tax that property owners must pay if their property is vacant. These rates are charged by the local government and are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is the estimated annual rental value of the property as of a specific date, usually set by the local government.
In most cases, property owners are required to pay 100% of the normal business rates on a vacant property for the first three months it is empty. After three months, the rates payable on empty commercial property increase to 200% of the normal rate. This steep increase is meant to incentivize property owners to actively market and lease their vacant properties, as well as to discourage property owners from leaving properties empty for extended periods of time.
There are a few exceptions to this rule, however. Some properties may be exempt from paying empty property rates, such as properties that are listed buildings, properties that are undergoing repairs or renovations, and properties that are deemed unfit for occupation due to health and safety reasons. Property owners should check with their local government to see if their property qualifies for any exemptions from empty property rates.
In some cases, property owners may be able to apply for relief from empty property rates. This relief is typically granted on a case-by-case basis and is subject to approval by the local government. Property owners may be required to provide evidence of their efforts to market and lease the property, as well as any extenuating circumstances that may have led to the property sitting vacant. Property owners should work closely with their local government to explore all options for reducing or avoiding empty property rates.
There are also some strategies that property owners can use to reduce the impact of empty property rates on their finances. One option is to lease the property on a short-term basis to a temporary tenant, such as a pop-up shop or event space. By doing so, property owners can avoid paying empty property rates while generating some rental income. Property owners should be sure to carefully review any lease agreements and consult with legal and financial professionals before entering into a temporary tenancy.
Another option is to work with a property management company to actively market and lease the property. Property management companies have the expertise and resources to help property owners find suitable tenants for their vacant properties, reducing the likelihood of having to pay empty property rates. Property owners should research and interview several property management companies before selecting one to work with, ensuring that they have experience in leasing commercial properties and a track record of success.
Property owners may also consider investing in improvements to the property to make it more attractive to potential tenants. This could include renovations, upgrades, or cosmetic enhancements that can help increase the property’s marketability and reduce the time it sits vacant. While this option may require an upfront investment, it can ultimately pay off in the form of higher rental income and lower empty property rates.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners. Understanding how these rates are calculated, what exemptions and relief options are available, and how to reduce their impact can help property owners make informed decisions about their investments. By exploring all options and working closely with local government and industry professionals, property owners can effectively manage empty property rates and maximize the value of their commercial properties.