As a commercial property owner, one of the last things you want to deal with is paying empty business rates on a property that is not generating any income. empty business rates, also known as vacant rates, are a tax that commercial property owners must pay to the local council if their property is empty for a certain period of time. This tax is in addition to the regular business rates that are paid on properties that are occupied.
The concept of empty business rates was introduced as a way to encourage property owners to fill empty buildings and prevent them from falling into disrepair. However, many property owners argue that these taxes can be a significant financial burden, especially during times of economic downturn when filling vacant properties can be challenging.
empty business rates are calculated based on the rateable value of the property and the length of time it has been empty. The rateable value is determined by the Valuation Office Agency (VOA) and is used to calculate the annual business rates that must be paid on the property when it is occupied. The rates are then doubled for the first three months that the property is empty, and tripled after that.
For example, if a property has a rateable value of £20,000 and has been empty for six months, the owner would be required to pay empty business rates of £20,000 for the first three months and £60,000 for the following three months. This means that the total empty business rates for six months would be £80,000, which can be a substantial amount for a property owner to pay on a property that is not generating any income.
The impact of empty business rates can be particularly challenging for small businesses and property owners who may be struggling financially. In some cases, property owners may be forced to sell their properties at a loss or even declare bankruptcy in order to avoid paying empty business rates. This can have a ripple effect on local economies, as vacant properties can lead to decreased foot traffic and lower property values in the surrounding area.
There have been calls for reform of the empty business rates system in order to make it more equitable for property owners. Some have suggested that the rates should be based on the actual rental value of the property, rather than the rateable value determined by the VOA. Others have proposed that empty business rates should be waived for a certain period of time in order to give property owners the opportunity to find tenants for their properties.
In the meantime, property owners are encouraged to explore other options for mitigating the impact of empty business rates on their finances. One option is to apply for a business rates relief or exemption if the property meets certain criteria, such as being newly built or undergoing renovation. Property owners can also consider letting the property out on a short-term basis or offering incentives to potential tenants in order to fill the property more quickly.
In conclusion, empty business rates can be a significant financial burden for commercial property owners, especially during times of economic downturn. It is important for property owners to be aware of the implications of empty business rates and to explore all available options for mitigating their impact. By working with local councils and exploring alternative solutions, property owners can navigate the challenges of empty business rates and ultimately ensure the long-term success of their properties.