Void business rates, also known as empty property rates, can be a major concern for property owners and businesses. These rates are essentially a tax on unused commercial properties, posing a financial burden on those who are already struggling with vacant spaces. In this article, we will delve into what void business rates are, how they are calculated, and what options are available to mitigate their impact.
What are void business rates?
Void business rates are a form of tax levied by local authorities on commercial properties that are empty or unoccupied. The purpose of these rates is to encourage property owners to either occupy or redevelop vacant spaces, thus reducing blight and stimulating economic activity in the area. However, the imposition of void business rates can also have the unintended consequence of burdening property owners with additional costs during times of vacancy.
How are void business rates Calculated?
The calculation of void business rates varies depending on the location and size of the property. In England, for example, empty properties with a rateable value of less than £2,900 are exempt from void business rates for the first three months. After this initial period, the rates are set at 100% of the full rateable value. In Wales, the exemption period is extended to six months.
For properties with a rateable value above £2,900, void business rates are typically set at 50% of the full rateable value after the initial exemption period. This can still amount to a significant financial burden for property owners, especially if the vacancy persists for an extended period.
Mitigating the Impact of void business rates
Given the potential financial strain that void business rates can impose, property owners may explore various options to mitigate their impact. One common strategy is to seek temporary occupation of the property, either through short-term leases or licensing agreements. By securing a temporary tenant, property owners may be able to qualify for exemption from void business rates for the duration of the occupation.
Another approach is to consider redeveloping the property to make it more attractive to potential tenants. This may involve refurbishing the space, reconfiguring the layout, or enhancing amenities to better meet the needs of modern businesses. While redevelopment may require an upfront investment, it can ultimately result in a higher occupancy rate and increased rental income, offsetting the costs of void business rates.
Property owners may also explore the option of appealing the rateable value of their property to lower their void business rates. This can be a complex process that involves submitting evidence to support a reduction in the property’s value, such as market comparisons, rental income data, or evidence of disrepair or obsolescence. While there is no guarantee of success, a successful appeal can result in significant savings on void business rates.
Furthermore, property owners should stay informed about any changes in legislation or government policies that may impact void business rates. By staying abreast of developments in this area, property owners can proactively adjust their strategies to mitigate the financial impact of void business rates on their bottom line.
In conclusion, void business rates can be a challenging aspect of property ownership for businesses and property owners alike. However, by understanding how these rates are calculated, exploring various strategies to mitigate their impact, and staying informed about relevant changes in legislation, property owners can effectively navigate the complexities of void business rates. With careful planning and proactive management, property owners can minimize the financial burden of void business rates and optimize the value of their commercial properties.