Empty commercial properties can be a burden on property owners, not only due to lost rental income but also because of the rates payable on these vacant spaces. In the world of commercial real estate, owning an empty property can still incur costs in the form of business rates, making it essential for property owners to understand the rates payable on their vacant properties.
Business rates are taxes paid on non-residential properties, including commercial spaces like shops, offices, warehouses, and factories. These rates are charged by local authorities in the UK based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency and is used to calculate the amount of business rates that a property owner must pay.
When a commercial property becomes empty, the owner may still be liable to pay business rates on the vacant space. This can come as a surprise to property owners who may have assumed that they would be exempt from paying rates on an empty property. However, the rules around rates payable on empty commercial property are not as straightforward as one might think.
In the past, property owners could receive an exemption from paying business rates on empty commercial properties for a limited period. However, changes in legislation have made it more difficult for property owners to avoid paying rates on vacant spaces. Currently, properties that have been empty for three months or more are subject to rates payable at the full rate, with some exceptions and discounts depending on the circumstances.
One of the main exceptions to paying rates on empty commercial property is if the property is listed in the Valuation Office Agency’s rating list as exempt. Certain types of empty properties may qualify for exemptions from paying business rates, such as agricultural land, fish farms, and properties used for public worship. Property owners should check with their local authority or the Valuation Office Agency to see if their vacant property qualifies for an exemption from rates.
Another way that property owners can reduce the amount of rates payable on empty commercial property is by applying for a temporary empty property relief. This relief allows property owners to receive a 100% discount on business rates for the first three months that the property is empty. After the initial three-month period, the discount is reduced to 50%, providing some relief for property owners who are struggling with the financial burden of paying rates on a vacant space.
For properties that have been empty for longer periods, property owners can apply for hardship relief to reduce the rates payable on their vacant commercial property. Hardship relief is granted at the discretion of the local authority and is designed to provide support to property owners who are facing financial difficulties due to rates on their empty property. Property owners must demonstrate that they are experiencing hardship and provide evidence to support their claim for relief.
It’s important for property owners to be aware of the rules and regulations surrounding rates payable on empty commercial property to avoid any unexpected costs or penalties. Failure to pay business rates on an empty property can result in legal action being taken against the property owner, including bailiffs seizing assets or court proceedings to recover the outstanding debt. Property owners should seek advice from a professional advisor or tax specialist to understand their obligations and explore all available options for reducing rates on their vacant property.
In conclusion, owning an empty commercial property can still incur costs in the form of business rates. Property owners must understand the rules and regulations surrounding rates payable on empty commercial property and explore all available options for reducing the financial burden of rates on vacant spaces. By staying informed and seeking professional advice, property owners can navigate the complex world of business rates and ensure that they are not caught off guard by unexpected costs associated with owning an empty commercial property.