When it comes to owning commercial property, there are a plethora of expenses that come with maintaining and managing the property. One of these expenses is business rates, which are taxes that are levied on non-domestic properties, including empty commercial properties. It is important for owners of empty commercial property to understand how rates on empty commercial property are calculated and the potential consequences of leaving a property vacant.
rates on empty commercial property are determined based on the rateable value of the property, which is assessed by the Valuation Office Agency (VOA). The rateable value is an estimate of the yearly rental value of the property as of a certain date, known as the antecedent valuation date (AVD). The AVD is typically set two years prior to the start of the rating list, which is a list of all non-domestic properties in a particular area and their rateable values.
Once the rateable value is determined, it is multiplied by the national non-domestic multiplier, which is set by the government each year. This calculation results in the annual business rates bill for the property. However, for empty commercial properties, special rules apply.
For the first three months that a commercial property is empty, no business rates are due. After the initial three-month period, rates on empty commercial property are charged at the full rate, unless the property qualifies for an exemption or relief. Some properties may be exempt from business rates, such as agricultural land and buildings, fish farms, and certain buildings used for charitable purposes.
Owners of empty commercial property may also be eligible for business rates relief under certain circumstances. For example, properties with a rateable value of less than £2,900 are eligible for small business rates relief, which provides a discount on the annual business rates bill. Additionally, properties that are undergoing renovation or being reoccupied may qualify for a temporary exemption from business rates.
It is important for owners of empty commercial property to be aware of the potential consequences of leaving a property vacant. In addition to the financial burden of paying business rates on an empty property, there are other costs associated with vacancy. Vacant properties are more susceptible to vandalism, theft, and other types of damage, which can be costly to repair. Additionally, empty properties may depreciate in value over time, as they are not generating any income for the owner.
There are steps that owners of empty commercial property can take to minimize the impact of rates on their property. One option is to lease the property to a tenant, even if it is on a short-term basis. By renting out the property, owners can generate income and potentially qualify for business rates relief if the property is being used for a qualifying purpose.
Another option is to apply for an exemption or relief from business rates. Owners of empty commercial property should familiarize themselves with the eligibility criteria for various types of relief and exemptions and submit an application to the local council if they believe they qualify.
Finally, owners of empty commercial property could consider selling the property if it is no longer needed or if the financial burden of maintaining the property is too great. Selling an empty property can free up capital and eliminate the ongoing expenses associated with ownership.
In conclusion, rates on empty commercial property can be a significant expense for owners, but there are ways to minimize the impact and maximize the value of the property. By understanding how rates on empty commercial property are calculated and exploring options for relief and exemptions, owners can make informed decisions about how to manage their vacant properties. Ultimately, proactive management of empty commercial properties can help to protect the value of the property and ensure a positive return on investment.