vacant business rates, also known as empty property rates, are a significant concern for businesses in the UK. These rates are charged on commercial properties that are empty for an extended period of time. The local council imposes these rates to encourage property owners to bring their vacant properties back into use, as well as to generate revenue for the community.
It is essential for business owners and property investors to understand how vacant business rates work and how they can minimize their impact on their bottom line. In this article, we will discuss the basics of vacant business rates and provide some tips on how to manage them effectively.
vacant business rates are calculated based on the rateable value of the property. The rateable value is an estimate of the annual rental value of the property as determined by the Valuation Office Agency (VOA). The local council then applies a multiplier to the rateable value to calculate the amount of the empty property rates.
The rate of empty property rates varies depending on the location of the property. In England, for example, the standard multiplier for business rates is 50.4p in 2021/2022, but for vacant properties, this rate can be doubled after three months of vacancy. This means that property owners could end up paying twice as much in business rates if their property remains empty for an extended period.
One of the main challenges of vacant business rates is that they can add significant costs to a property owner’s expenses. In addition to the regular expenses associated with maintaining an empty property, such as security and insurance, property owners must also budget for the additional cost of empty property rates. This can put a strain on the finances of businesses that are already struggling or property investors who are looking to maximize their returns.
There are, however, some exemptions and reliefs available to property owners to help reduce their vacant business rates liability. For example, properties that are undergoing major structural repairs or alterations may be eligible for a temporary exemption from empty property rates. In addition, listed buildings and properties with a rateable value of less than £2,900 are also exempt from empty property rates.
Property owners can also apply for a hardship relief if they can demonstrate that paying empty property rates would cause them significant financial hardship. However, these reliefs are granted at the discretion of the local council, so property owners must make a strong case to justify their request for relief.
Another option for property owners looking to reduce their vacant business rates liability is to consider leasing their property on a short-term basis. By leasing the property to a temporary tenant, property owners can avoid paying empty property rates and generate some income from the property in the meantime. This can be a win-win situation for both parties, as the temporary tenant gets access to a property at a reduced rate, while the property owner avoids high empty property rates.
In conclusion, vacant business rates can be a significant financial burden for property owners, but there are ways to manage them effectively. By understanding how empty property rates are calculated and exploring the various exemptions and reliefs available, property owners can minimize their liability and make the most of their vacant properties. Whether it’s applying for a temporary exemption, seeking hardship relief, or leasing the property on a short-term basis, property owners have options to help them navigate the challenges of vacant business rates.