Empty commercial properties can be a significant financial burden for property owners. Beyond the obvious loss of potential rental income, owners of vacant properties also have to contend with another financial hit – rates on empty commercial property. In this article, we will explore the implications of rates on empty commercial property and discuss potential solutions for property owners facing this challenge.
Business rates are a form of tax that is levied on most non-domestic properties in the UK. They are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency. rates on empty commercial property have long been a contentious issue for property owners, as they can add substantially to the costs of owning a vacant property.
One of the primary concerns for property owners is the impact that rates on empty commercial property can have on their financial viability. With no rental income coming in, owners of empty properties already have to cover costs such as maintenance, security, and insurance. Adding rates on top of these expenses can quickly become unsustainable for property owners, particularly if the property remains vacant for an extended period of time.
Furthermore, rates on empty commercial property can deter potential investors or tenants from taking on a property. The additional financial burden of rates can make an empty property less attractive from a financial perspective, as it adds to the overall costs of occupying the property. This can result in properties remaining vacant for longer periods, exacerbating the issue for property owners.
In recent years, the UK government has made some changes to the way rates on empty commercial property are levied. One significant change that was introduced in 2017 was the removal of the exemption for small commercial properties with a rateable value of £12,000 or less. This meant that even small businesses with empty properties were now liable for rates, which added to the financial pressure on small property owners.
Another change that has been proposed is the introduction of a rates holiday for newly built commercial properties. This would exempt newly built properties from paying rates for the first year of occupation, in an effort to incentivize development and reduce the number of vacant properties. While this proposal has not yet been implemented, it is indicative of the government’s recognition of the impact that rates on empty commercial property can have on property owners.
For property owners struggling with rates on empty commercial property, there are some potential solutions that they can explore. One option is to seek a rates relief or rebate from the local council. This could be available in certain circumstances, such as if the property is undergoing refurbishment or if it is in an area that is experiencing economic hardship. Property owners can also consider appealing the rateable value of their property if they believe it has been incorrectly assessed.
Another option for property owners is to explore alternative uses for their empty properties. For example, they could consider renting out the property for short-term events or pop-up shops, which could generate some income and help to cover the costs of rates. Property owners could also explore the possibility of converting the property for residential use, which would exempt it from rates on empty commercial property.
Overall, rates on empty commercial property can be a significant financial challenge for property owners. The additional costs of rates can make owning a vacant property financially unsustainable and can deter potential investors or tenants from taking on the property. However, by exploring potential solutions such as seeking rates relief, appealing rateable values, or exploring alternative uses for the property, property owners can mitigate the impact of rates on empty commercial property and potentially turn their vacant properties into viable assets.