Commercial property owners need to be aware of the financial obligations that come with owning empty commercial properties. One of the most significant expenses that owners must consider is the rates payable on empty commercial property. These rates can have a substantial impact on a property owner’s bottom line, making it crucial to understand how they are calculated and what options are available for reducing them.
In simple terms, rates payable on empty commercial property are a tax that is levied on non-domestic properties by local authorities in the UK. These rates are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is an estimate of the annual rental value of the property as of a specific date, and it is used as the basis for calculating the rates payable.
The rates payable on empty commercial property can be a significant financial burden for property owners, especially if they have multiple properties that are sitting vacant. However, there are some exemptions and relief schemes available that can help reduce the amount of rates that must be paid.
One of the most common exemptions for empty commercial property rates is the 3-month exemption. This means that if a property is empty for less than 3 months, no rates will be payable on it. This can provide property owners with a bit of breathing room if they are between tenants or waiting for renovations to be completed before leasing the property out again.
Another exemption that may apply to empty commercial properties is the 6-month exemption for newly built properties. This exemption applies to properties that have been newly constructed or substantially renovated and have not yet been occupied. During the 6-month exemption period, no rates will be payable on the property, giving the owner some time to find a tenant or decide on a course of action for the property.
In addition to exemptions, there are also relief schemes available that can help reduce the rates payable on empty commercial property. One such scheme is the section 44A relief scheme, which provides a 50% reduction in rates for properties that have been empty for more than 3 months. This relief can provide a significant cost savings for property owners who are struggling to find tenants for their empty properties.
It is important for property owners to be aware of these exemptions and relief schemes and to take advantage of them whenever possible. By reducing the amount of rates payable on empty commercial property, owners can minimize their financial burden and increase their profitability in the long run.
In some cases, however, property owners may find themselves unable to take advantage of these exemptions or relief schemes, leaving them with no choice but to pay the full rates on their empty properties. In these situations, it is important for owners to explore other options for reducing their rates payable.
One option that property owners may consider is applying for a temporary rate relief scheme. This scheme allows property owners to apply for a temporary reduction in rates if they are experiencing financial difficulties or if the property is undergoing significant repairs or renovations. While this relief is only temporary, it can provide owners with some much-needed financial relief during challenging times.
Property owners may also consider exploring other ways to reduce their rates payable on empty commercial property, such as appealing the rateable value of the property or exploring alternative uses for the property that may qualify for lower rates. By being proactive and exploring all available options, property owners can minimize their financial burden and ensure that their empty properties are as profitable as possible.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners, but there are exemptions and relief schemes available that can help reduce this expense. By understanding how rates are calculated and exploring all available options for reducing rates payable, property owners can minimize their financial burden and ensure that their empty properties remain profitable in the long run.