When it comes to owning commercial property, there are many factors that can impact the overall cost of ownership. One such factor that often catches property owners off guard is the rates on empty commercial property. These rates, also known as business rates or non-domestic rates, are charged on most non-residential properties in the UK, including offices, shops, pubs, warehouses, and factories. In this article, we will take a closer look at what rates on empty commercial property are, how they are calculated, and what property owners can do to minimize their impact.
rates on empty commercial property are essentially a tax imposed by local authorities on non-residential properties that are vacant. The purpose of these rates is to generate revenue for local councils and help fund local services such as schools, roads, and emergency services. While the concept of business rates is not new, the rates on empty commercial property have garnered significant attention in recent years due to changes in legislation and their impact on property owners.
The calculation of rates on empty commercial property is based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is an estimate of the annual rental value of the property at a certain point in time. The actual rates bill is calculated by multiplying the rateable value by a multiplier set by the government, known as the Uniform Business Rate (UBR). The current UBR in England for the financial year 2021/2022 is 51.2p, meaning that for a property with a rateable value of £20,000, the rates bill would be £10,240 per year.
One of the main concerns for property owners is the rates on empty commercial property, as these rates can quickly add up and become a significant financial burden. Prior to April 1, 2008, most non-domestic properties in the UK were exempt from paying business rates for the first three months they were empty. However, changes in legislation introduced by the government extended this exemption period to six months for most properties, and up to 18 months for industrial properties such as warehouses and factories.
While the extended exemption period provides some relief for property owners, many still find themselves in a difficult situation, particularly in light of the current economic climate. With the rise of online shopping and the impact of the COVID-19 pandemic on the high street, many commercial properties are struggling to find tenants, leaving property owners with vacant buildings and mounting rates bills.
So, what can property owners do to minimize the impact of rates on empty commercial property? One option is to explore the possibility of claiming empty property relief. Empty property relief is a discount on business rates that is available to property owners for a limited period of time after their property becomes vacant. In England, property owners are entitled to 100% relief for the first three months that their property is empty, followed by a 10% discount for industrial properties and a 100% discount for listed buildings for up to 18 months.
Another option for property owners is to consider engaging with their local council to discuss possible exemptions or reductions in rates. While local authorities have limited discretion in granting relief, they may be willing to consider individual cases and provide some flexibility in exceptional circumstances. It is important for property owners to be proactive in communicating with their council and providing any relevant information or evidence to support their case.
In conclusion, rates on empty commercial property are a significant consideration for property owners, especially in today’s challenging economic environment. Understanding how these rates are calculated, exploring options for relief, and engaging with local authorities can help property owners minimize the financial impact of vacant properties. By staying informed and taking proactive steps, property owners can navigate the complexities of business rates and protect their investments in commercial real estate.