empty rates commercial property, often referred to simply as “empty rates,” can be a costly headache for property owners. In this guide, we will explore what empty rates are, why they exist, and what property owners can do to minimize their impact.
Empty rates are a form of tax that property owners are required to pay on commercial properties that are empty or unoccupied. These rates are imposed by local authorities and are intended to encourage property owners to bring their empty properties back into use. However, empty rates can be a significant financial burden for property owners, especially in times of economic downturn when finding tenants can be more challenging.
The rateable value of a commercial property is used to calculate the amount of empty rates that must be paid. This rateable value is determined by the Valuation Office Agency (VOA) and is based on the rental value of the property. The empty rates are typically set at 50% of the standard business rates for the first three months that a property is empty, and then at the full rate thereafter.
Property owners may be exempt from empty rates in certain circumstances, such as when a property is undergoing renovations or repairs. However, these exemptions are limited and do not apply to all vacant properties. Additionally, property owners must apply for these exemptions and provide evidence to support their claim.
The impact of empty rates on property owners can be significant. Not only do property owners have to bear the cost of the empty rates themselves, but they also miss out on rental income that could be generated if the property were occupied. This can make it harder for property owners to cover their mortgage repayments, insurance costs, and other expenses associated with owning a commercial property.
So, what can property owners do to minimize the impact of empty rates on their properties? One option is to actively market the property and find new tenants as quickly as possible. By doing so, property owners can reduce the amount of time that the property is empty and therefore minimize the amount of empty rates that they have to pay.
Another option is to consider leasing the property on a shorter-term basis. This could involve offering the property on a short-term lease or a flexible lease arrangement that allows tenants to occupy the property for a limited period of time. While this may not be a long-term solution, it can help to generate some income in the short term and reduce the amount of empty rates that need to be paid.
Property owners can also explore other uses for their empty properties, such as converting them into temporary storage facilities or pop-up shops. By finding alternative uses for the property, property owners may be able to generate some income and offset the cost of the empty rates.
It is also worth noting that property owners can challenge the rateable value of their property and request a reassessment by the VOA. If property owners believe that the rateable value is incorrect or unfair, they can submit an appeal and provide evidence to support their case. If successful, this could result in a lower rateable value and therefore lower empty rates.
In conclusion, empty rates commercial property can be a significant financial burden for property owners. However, there are steps that property owners can take to minimize the impact of empty rates on their properties. By actively marketing the property, considering alternative uses, and challenging the rateable value, property owners can reduce the amount of empty rates that they have to pay and help to alleviate some of the financial strain.