When it comes to owning commercial property, there are many costs involved in addition to just the purchase price. One significant expense that owners of empty commercial properties need to be aware of is the rates payable on those properties. These rates can add up quickly and significantly impact the overall financial health of the property owner. In this article, we will discuss what rates payable on empty commercial property are, how they are calculated, and what property owners can do to minimize these costs.
rates payable on empty commercial property, often referred to simply as empty property rates, are taxes that property owners must pay on commercial properties that are unoccupied. These rates are separate from standard business rates that all commercial properties are subject to and are meant to discourage property owners from leaving their properties vacant for extended periods of time.
The rateable value of a commercial property is determined by the government’s Valuation Office Agency (VOA) and is used to calculate the amount of rates payable on the property. The rateable value is based on the property’s market rental value and is reassessed every five years. If a property is vacant, it is given a rateable value of its estimated rental value assuming it was in a reasonable state of repair and fit for occupation.
The rates payable on empty commercial property are calculated based on a percentage of the rateable value of the property. The exact percentage varies depending on the location of the property, with different rates being set by local authorities. In England, for example, the standard percentage is set at 50%, meaning property owners would pay half of the normal business rates on an empty property.
It’s important to note that owners of empty commercial properties are still required to pay these rates even if they are actively trying to rent out or sell the property. This can be a significant financial burden for property owners, especially if the property remains unoccupied for an extended period of time.
However, there are some exemptions and reliefs available to help property owners reduce the amount of rates payable on their empty commercial properties. For example, small business rate relief may be available to property owners who occupy only one property with a rateable value below a certain threshold. There are also temporary exemptions available for properties that are undergoing repairs or renovations.
Property owners can also apply for exemptions from empty property rates if they meet certain criteria. For example, properties that are unable to be occupied due to legal restrictions, such as being unfit for human habitation or actively being marketed for sale or rent, may be exempt from empty property rates. However, these exemptions are subject to approval from the local authority and may require regular updates and proof of efforts to market the property.
There are also steps that property owners can take to minimize the amount of rates payable on their empty commercial properties. For example, owners can consider leasing the property to a charity organization, as properties occupied by registered charities are exempt from empty property rates. Property owners can also explore options for short-term leases or licenses that can help generate income from the property while reducing the amount of rates payable.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners, especially if the property remains unoccupied for an extended period of time. Understanding how these rates are calculated and what exemptions and reliefs are available can help property owners minimize these costs and make owning empty commercial properties more financially viable. By exploring all available options and taking proactive steps, property owners can better manage the rates payable on their empty commercial properties and protect their overall financial health.