As a business owner, navigating the costs associated with owning or leasing commercial property can be a daunting task. One often overlooked expense that can catch property owners off guard is the rates on empty commercial property. These rates, also known as business rates, are charged on most non-domestic properties and can significantly impact the finances of a business.
Business rates are a tax levied by local authorities on non-residential properties such as shops, offices, warehouses, and factories. The 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 if it were rented out on the open market.
One of the key issues with business rates is that they are still payable even if the property is empty. This can be a significant burden for landlords or property owners who are struggling to find tenants or who are in the process of refurbishing or renovating their property. The rates on empty commercial property can add up quickly and eat into profits, making it even more challenging to keep the property viable.
There are, however, some exemptions and reliefs available for empty commercial properties. For example, if a property is empty for three months or six months (depending on the type of property), it becomes eligible for a 100% relief on business rates for a certain period. This can provide some much-needed financial relief for property owners who are struggling to find tenants or who are going through a transitional period.
In addition to exemptions for empty properties, there are also other reliefs available for certain types of properties or businesses. For example, small businesses occupying only one property with a rateable value below a certain threshold may be eligible for small business rate relief, which can reduce their business rates bill. Other types of reliefs include rural rate relief, charitable rate relief, and enterprise zone relief.
It is important for property owners to be aware of the various reliefs and exemptions available to them and to take advantage of them whenever possible. This can help to alleviate some of the financial burden of paying rates on empty commercial property and can make it easier to keep the property afloat during difficult times.
Another option for property owners struggling with rates on empty commercial property is to consider leasing the property out on a short-term basis. By leasing the property to a temporary tenant, property owners can generate some income from the property and avoid paying full business rates while the property is empty. Short-term leases can be a win-win situation for both parties – the property owner generates some income, and the tenant gets a temporary space to operate their business.
Property owners should also consider other ways to mitigate the costs of rates on empty commercial property. For example, they can negotiate with the local authority for a reduction in business rates if they can demonstrate that the property is genuinely difficult to let or that there are extenuating circumstances that are preventing them from finding a tenant. Property owners can also explore options for redeveloping or repurposing the property to make it more attractive to potential tenants.
In conclusion, rates on empty commercial property can be a significant financial burden for property owners, but there are ways to mitigate these costs. By taking advantage of exemptions and reliefs, exploring short-term leasing options, and negotiating with the local authority, property owners can navigate the costs of rates on empty commercial property and keep their property viable in the long run.