Business rates, often referred to as non-domestic rates, are taxes that are levied on commercial properties in the UK These rates are set by the government and are based on the rateable value of the property However, what happens when a commercial property is empty? How are business rates affected by vacant properties? In this article, we will explore the implications of business rates on empty commercial property.
When a commercial property becomes vacant, the owner is still liable to pay business rates This can come as a shock to some property owners, as they may assume that they do not have to pay rates on a property that is not being used However, this is not the case Business rates are based on the rateable value of the property, not on its occupancy status Therefore, even if a property is empty, the owner is still responsible for paying rates.
The rationale behind this policy is to discourage property owners from leaving their properties vacant for long periods of time By requiring owners to pay business rates on empty properties, the government hopes to incentivize them to either rent out the property or put it to productive use This is especially important in areas where there is high demand for commercial space but a limited supply.
However, the policy of requiring owners to pay business rates on empty properties has received criticism from some quarters Critics argue that it is unfair to penalize property owners for leaving their properties vacant, especially during periods of economic downturn or when there is simply no demand for commercial space in a particular area They argue that this policy can place an undue financial burden on property owners and may discourage them from investing in or maintaining empty properties.
To address some of these concerns, the government has introduced certain exemptions and reliefs for empty commercial properties For example, owners of newly built properties are given a 100% relief on business rates for the first three months after the property becomes vacant This is intended to give property owners some breathing room as they look for tenants or buyers for their properties.
In addition, owners of industrial properties are given a 100% relief on business rates for the first six months after the property becomes vacant business rates empty commercial property. This is in recognition of the fact that industrial properties can be more challenging to rent out or sell compared to other types of commercial properties By providing this relief, the government hopes to encourage owners to make use of their industrial properties rather than leaving them empty.
Despite these exemptions and reliefs, the fact remains that business rates can still be a significant financial burden for property owners, especially if they have multiple vacant properties This has led to calls for a reform of the business rates system to make it fairer and more flexible for property owners Some have suggested that business rates should be based on the actual rental value of the property, rather than its rateable value, to better reflect market conditions.
In the meantime, property owners who have vacant commercial properties must find ways to manage their business rates liability One option is to try to rent out the property as quickly as possible to generate rental income and offset the cost of business rates This may involve offering incentives to potential tenants, such as rent-free periods or reduced rent, to make the property more attractive.
Another option is to consider applying for business rates relief or exemptions that may be available for specific types of properties or circumstances For example, properties that are undergoing major renovation or redevelopment may be eligible for relief on their business rates Owners should consult with their local council or a professional advisor to find out what relief options are available to them.
In conclusion, business rates on empty commercial properties can be a significant financial burden for property owners While the policy of requiring owners to pay rates on empty properties is intended to incentivize them to put their properties to productive use, there are concerns about its fairness and impact on owners As the government considers reforming the business rates system, property owners must find ways to manage their rates liability and explore options for relief or exemptions By taking proactive steps, property owners can ensure that their empty properties do not become a financial drain on their resources