When it comes to owning or leasing commercial property, business rates are an important consideration that can significantly impact a business’s bottom line. One of the most concerning aspects of business rates for property owners is the liability for rates on empty commercial property. This issue has become increasingly relevant in recent years as more and more commercial properties sit empty due to various economic factors. In this article, we will explore the implications of business rates on empty commercial property and how property owners can navigate this challenge.
Business rates are a tax that is levied on non-domestic properties in the UK. The rates are calculated based on the rental value of a property and are used to fund local services such as schools, roads, and waste collection. Property owners or occupiers are responsible for paying business rates, and the amount due is assessed by the Valuation Office Agency (VOA).
One of the most significant challenges that property owners face is the liability for business rates on empty commercial property. In the past, property owners could claim empty property relief, which provided a temporary exemption from paying rates on empty properties. However, changes to the law in recent years have reduced the availability of this relief, leaving many property owners with a hefty rates bill for their empty properties.
The government’s rationale for reducing empty property relief is to incentivize property owners to bring empty properties back into use. By imposing rates on empty properties, the government aims to discourage property owners from leaving properties vacant for extended periods. While this may be a well-intentioned policy, it has created a financial burden for many property owners, particularly in times of economic uncertainty.
Property owners who are struggling to pay rates on empty properties have a few options available to them. One option is to challenge the rateable value of the property through the VOA’s appeals process. If a property owner can demonstrate that the rateable value is incorrect, they may be able to reduce their rates bill. However, the appeals process can be time-consuming and challenging, so property owners should seek professional advice before proceeding.
Another option for property owners is to consider leasing the property on a short-term basis to generate rental income and avoid paying rates on an empty property. While this may not be an ideal solution for all property owners, it can help alleviate the financial burden of rates on empty properties. Property owners should carefully consider their options and weigh the costs and benefits of leasing an empty property.
Property owners can also explore other avenues for reducing their rates bill, such as applying for hardship relief or negotiating a payment plan with their local council. Some councils offer discretionary relief for property owners who are facing financial hardship, so it is worth exploring these options to see if they may apply to your situation.
In conclusion, business rates on empty commercial property can be a significant financial burden for property owners. The reduction of empty property relief has left many property owners with few options for mitigating the impact of rates on empty properties. Property owners should carefully consider their options and seek professional advice to navigate this challenge effectively. By exploring alternative solutions such as challenging the rateable value, leasing the property, or applying for hardship relief, property owners can work towards reducing the financial strain of rates on empty commercial property.