Vacant business rates, often referred to as empty property rates, are taxes imposed on property owners with vacant commercial premises. These rates are charged by local authorities in the United Kingdom and aim to encourage property owners to bring their vacant properties back into use. While the intentions behind vacant business rates may seem logical, many property owners find themselves burdened by these additional costs, especially during times of economic downturn or when facing difficulty in finding tenants. In this article, we will explore what vacant business rates are, how they are calculated, and offer tips on how property owners can manage and potentially reduce these rates.
Definition of vacant business rates:
Vacant business rates are levied on commercial properties that have been unoccupied for a certain period of time. The rates are set by local authorities and can vary depending on the location and size of the property. Vacant business rates are separate from regular business rates, which are charged on occupied commercial properties. The purpose of vacant business rates is to deter property owners from leaving their premises empty for extended periods and to incentivize them to actively market and rent out their properties.
Calculating vacant business rates:
The calculation of vacant business rates can be a complex process and is based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA) and is used as the basis for both regular and vacant business rates. Property owners are typically required to pay 100% of the vacant business rates if their property has been empty for more than three months. However, there are certain exemptions and reliefs available for specific types of properties, such as newly built properties or those undergoing substantial renovation.
Managing vacant business rates:
Property owners facing vacant business rates may feel overwhelmed by the additional financial burden. However, there are several strategies that can be employed to manage and potentially reduce these rates. One option is to actively market the property to attract potential tenants. By demonstrating efforts to fill the vacant space, property owners may be able to qualify for certain exemptions or reliefs. Additionally, property owners can consider negotiating with the local authority to discuss possible reductions in vacant business rates, especially if they can prove that efforts have been made to market the property.
Another way to manage vacant business rates is to consider short-term leasing options, such as offering the property for pop-up shops or temporary events. This can help generate some income while also potentially attracting long-term tenants. Property owners can also explore the possibility of converting the property for alternative uses, such as residential or mixed-use developments, which may qualify for lower rates or exemptions.
Reducing Vacant Business Rates:
While managing vacant business rates can be challenging, there are ways to potentially reduce or eliminate these costs. Property owners may be eligible for certain reliefs, such as the Small Business Rates Relief or the Empty Property Relief, which offer reduced rates for qualifying properties. It is important for property owners to stay informed about any changes in legislation or updates to reliefs that may benefit them.
Conclusion:
Vacant business rates can present a significant financial challenge for property owners with unoccupied commercial premises. Understanding how these rates are calculated and exploring strategies to manage and potentially reduce them is crucial for navigating this aspect of property ownership. By actively marketing properties, negotiating with local authorities, and exploring alternative uses, property owners can take steps towards mitigating the impact of vacant business rates. Staying informed about available reliefs and exemptions is also essential in finding ways to alleviate the financial strain of empty property rates.