Investing in commercial properties can be a lucrative venture for many individuals and companies. However, one aspect of this investment that can sometimes catch property owners off guard is the rates they must pay on empty commercial property. These rates, also known as business rates, can have a significant impact on your bottom line if not properly understood and managed. In this article, we will delve into what rates on empty commercial property are, how they are calculated, and what you can do to minimize them.
Business rates are a form of property tax that all commercial property owners in the United Kingdom are required to pay. These rates are calculated based on the estimated rental value of the property, as determined by the local government. The rates are set by the government and are used to fund local services such as schools, roads, and public transportation.
One of the key issues with business rates is that property owners are still required to pay them even if their property is empty. This can be a significant burden for property owners who are struggling to find tenants or are in the process of refurbishing their property. In some cases, the rates on an empty commercial property can even exceed the rental income that the property would generate if it were tenanted.
So, how are business rates on empty commercial property calculated? The rateable value of a property is determined by the Valuation Office Agency (VOA), based on factors such as the size, location, and usage of the property. This rateable value is then multiplied by the uniform business rate (UBR) set by the government to calculate the annual business rates bill.
To minimize the impact of business rates on empty commercial property, there are a few strategies that property owners can employ. One common approach is to apply for empty property rate relief. This relief can reduce the business rates on an empty property by up to 100% for a specified period, typically three months for industrial properties and six months for other commercial properties.
Another option for property owners is to seek a temporary occupation of their property. By allowing a charity or community interest group to use the property for a short period, owners may be eligible for charitable rate relief. This relief can reduce the business rates bill by 80% if the property is used for charitable purposes.
Property owners can also consider appealing the rateable value of their property if they believe it has been overestimated by the VOA. This process involves submitting evidence to the VOA to support a lower rateable value, which can result in a reduction in the business rates bill.
For property owners who are struggling to find tenants for their commercial property, it may be worth considering leasing the property on a short-term basis. By leasing the property for a period of less than six weeks, owners may be eligible for small business rate relief, which can result in a 100% reduction in the business rates bill.
Ultimately, the key to minimizing the impact of business rates on empty commercial property is to carefully consider your options and take proactive steps to manage them effectively. By exploring the various relief schemes available and seeking professional advice when necessary, property owners can reduce the financial burden of empty property rates and maximize their investment potential.
In conclusion, rates on empty commercial property can be a significant expense for property owners, but with careful planning and proactive management, the impact of these rates can be minimized. By understanding how business rates are calculated, exploring relief schemes, and seeking professional advice when necessary, property owners can take steps to ensure that their investment in commercial property remains profitable.