When it comes to owning commercial property, there are a lot of costs involved. One of the expenses that can catch property owners off guard is business rates on empty commercial property. As if owning and managing a commercial property isn’t challenging enough, the burden of paying rates on a property that isn’t generating any income can be a significant strain on finances. In this article, we will explore everything you need to know about rates on empty commercial property and how you can navigate this potential financial burden.
Business rates are a tax that businesses in the UK have to pay on the commercial properties they occupy. However, there are also rates that need to be paid on empty commercial properties. These rates, known as empty property rates, are charged at 100% of the normal business rates after a property has been unoccupied for a specified period of time.
Empty property rates can be a major headache for commercial property owners, especially during times when it’s more challenging to find tenants or when properties are undergoing renovations or repairs. The hefty rates on empty properties can quickly add up and put a strain on a property owner’s finances.
So, what can you do to navigate rates on empty commercial property and minimize the financial impact?
First and foremost, it’s essential to understand the rules and regulations surrounding empty property rates. In England, for example, properties with a rateable value of less than £2,600 are exempt from paying empty property rates. For properties with a rateable value of between £2,600 and £12,000, the rates are discounted by 100%.
Property owners should also be aware of the temporary relief schemes that may be available to them. In response to the economic challenges posed by the COVID-19 pandemic, the UK government introduced a relief scheme for empty commercial properties in England. Under this scheme, retail, hospitality, and leisure properties are exempt from paying empty property rates for the 2021-2022 tax year.
Additionally, property owners should explore ways to mitigate the impact of empty property rates. One way to do this is by actively marketing the property to attract potential tenants. By filling the property with tenants, property owners can avoid paying empty property rates and generate income from the property. Offering incentives such as rent-free periods or reduced rent can help attract tenants, especially in a competitive market.
Property owners should also consider exploring alternative uses for their empty commercial properties. For example, converting an empty retail space into residential units or office space can not only help generate income but also reduce the burden of paying empty property rates. Before embarking on any such conversion, it’s essential to check with local authorities to ensure compliance with zoning regulations and obtain any necessary permits.
Another strategy to navigate rates on empty commercial property is to negotiate with the local council. In some cases, councils may be willing to provide a temporary reduction or waiver of empty property rates, especially if the property is undergoing significant repairs or renovations. It’s crucial to provide evidence of the work being done on the property and make a strong case for why a reduction in rates is warranted.
Overall, rates on empty commercial property can be a significant financial burden for property owners. By understanding the rules and regulations surrounding empty property rates, exploring relief schemes, actively marketing the property, considering alternative uses, and negotiating with the local council, property owners can navigate this financial challenge and minimize the impact on their finances. With careful planning and proactive management, rates on empty commercial property don’t have to be a financial headache.