Business rates are a tax on non-residential properties in the United Kingdom, including shops, offices, and factories They are based on the rateable value of the property as determined by the government’s Valuation Office Agency Business rates can be a significant expense for commercial property owners, and one issue that many landlords face is the payment of business rates on empty properties.
When a commercial property becomes vacant, the owner may still be liable to pay business rates This can create a financial burden for property owners, especially in cases where a property remains empty for an extended period of time In this article, we will explore the impact of business rates on empty commercial property and discuss some of the challenges that property owners face.
One of the primary reasons why business rates on empty commercial property can be a significant issue is that they are often based on the rateable value of the property rather than the actual rental income generated This means that property owners may be required to pay substantial business rates even if they are not receiving any rental income from the property In some cases, the business rates on an empty property can exceed the rental income that the property would generate if it were occupied.
Another challenge for property owners is that business rates on empty properties are calculated at a higher rate than occupied properties In England, for example, empty commercial properties with a rateable value of £2,900 or more are subject to business rates at a rate of 100% of the normal charge This can add up to a significant expense for property owners, especially if they have multiple empty properties in their portfolio.
One issue that exacerbates the problem of business rates on empty commercial property is the long period of time it can take to find a new tenant In some cases, a property may sit empty for months or even years before a suitable tenant is found business rates empty commercial property. During this time, property owners are still required to pay business rates, putting a strain on their finances and making it difficult to cover other expenses related to the property.
There are some exemptions and reliefs available to property owners who are struggling to pay business rates on empty commercial property For example, properties owned by charities or community amateur sports clubs may be eligible for 80% relief on business rates if they are empty Additionally, properties with a rateable value below a certain threshold may be exempt from business rates altogether.
Property owners may also apply for hardship relief if they can demonstrate that paying business rates would cause them financial hardship However, these exemptions and reliefs are not always easy to qualify for, and property owners may face a lengthy and complicated application process.
In recent years, there have been calls for reform of the business rates system to make it fairer for property owners, especially those with empty commercial properties Some have argued that business rates on empty properties discourage investment and development, as property owners are reluctant to leave properties vacant due to the high cost of business rates.
One proposal that has been put forward is to introduce a system of tapered relief for empty commercial properties, where the business rates payable would decrease gradually over time This would provide some relief to property owners while still encouraging them to find a new tenant for their property.
In conclusion, business rates on empty commercial property can be a significant financial burden for property owners The high cost of business rates, coupled with the challenges of finding a new tenant, can make it difficult for property owners to cover their expenses and maintain profitability While there are some exemptions and reliefs available, the process of applying for them can be complex and time-consuming As calls for reform of the business rates system continue, property owners will need to carefully consider the financial implications of owning empty commercial properties and explore all available options for relief.