empty rates commercial property, also known as business rates on vacant commercial properties, can be a significant financial burden for property owners and investors. In this comprehensive guide, we will delve into what empty rates are, how they are calculated, and the ways in which property owners can mitigate or reduce their empty rate liability.
Empty rates are a type of tax that is levied on non-domestic properties that are empty or unoccupied for a certain period of time. The idea behind empty rates is to discourage property owners from leaving their properties vacant for extended periods and to encourage them to bring their properties back into productive use. However, empty rates can often be a source of frustration for property owners, especially when properties are empty for reasons beyond their control, such as market conditions or ongoing renovation work.
Empty rates are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is essentially an estimate of the yearly rental value of the property at a certain date. Empty rates are usually charged at a rate of 50% of the normal business rates for properties that have been empty for three months or more, and at the full rate after a property has been empty for at least six months.
Property owners are required to pay empty rates on their vacant properties unless they qualify for an exemption or relief. There are certain circumstances in which a property may be exempt from empty rates, such as when it is listed or has a preservation order on it, or when it is undergoing major structural repairs. Property owners may also be able to claim relief on their empty rates if their property is in need of repair or if it is part of a small business premises.
One common misconception about empty rates is that they only apply to commercial properties. While it is true that empty rates primarily target non-domestic properties, such as shops, offices, warehouses, and industrial units, they can also apply to certain domestic properties, such as holiday homes and second homes. However, domestic properties are subject to different rules and exemptions when it comes to empty rates.
Property owners who are facing empty rates on their commercial properties have several options for mitigating or reducing their empty rate liability. One option is to occupy the property with temporary tenants or licensees, even if only on a short-term basis. By doing so, property owners can reset the clock on their empty rates liability and potentially qualify for exemptions or relief.
Another option for reducing empty rates liability is to appeal the rateable value of the property with the VOA. If property owners believe that the rateable value of their property is inaccurate or unfair, they have the right to challenge it and seek a revaluation. A lower rateable value would result in lower empty rates liability for the property owner.
Property owners may also consider exploring other avenues for reducing their empty rates liability, such as entering into a managed occupation agreement with a property guardian company. Property guardians are individuals or companies that occupy vacant properties on a temporary basis, providing a cost-effective solution for property owners while also deterring vandalism and squatting.
In conclusion, empty rates commercial property can be a significant financial burden for property owners and investors, but there are ways to mitigate or reduce this liability. By understanding how empty rates are calculated, knowing the exemptions and reliefs available, and exploring alternative solutions, property owners can effectively manage their empty rates liability and protect their investment in commercial properties.