When it comes to owning and managing property, business rates are an unavoidable expense that can have a significant impact on the bottom line. For property owners with vacant or empty properties, the issue of business rates on such properties becomes even more complex. In this article, we will take a closer look at the implications of business rates on empty property and how property owners can navigate this tricky terrain.
Business rates are a tax that is levied on non-domestic properties in the UK. These rates are calculated based on the rental value of the property as determined by the Valuation Office Agency (VOA). For commercial properties that are occupied and generating income, business rates are usually paid by the occupier of the property. However, in the case of empty or vacant properties, the responsibility for paying business rates falls on the property owner.
The issue of business rates on empty property has long been a bone of contention for property owners, especially during times of economic downturn when properties are more likely to remain vacant. From a property owner’s perspective, having to pay business rates on empty properties can feel like adding insult to injury. Not only are they not generating any income from the property, but they are also faced with the burden of paying taxes on it.
One of the main concerns for property owners is the financial impact of paying business rates on empty property. Depending on the size and location of the property, business rates can be a significant expense that eats into the property owner’s profits. In some cases, the cost of business rates on empty property can outweigh any potential rental income that the property may generate, leading to further financial strain on the property owner.
Another issue that property owners face when it comes to business rates on empty property is the potential for the property to fall into disrepair. With no income coming in from the property and the additional burden of paying business rates, property owners may struggle to maintain the property to a high standard. This can lead to a vicious cycle where the property’s value depreciates further, making it even harder to attract potential tenants in the future.
In recent years, the UK government has introduced measures to help alleviate the burden of business rates on empty property. One such measure is the Empty Property Relief scheme, which allows property owners to claim a temporary exemption from paying business rates on certain types of empty properties. This relief is typically granted for a period of three or six months, depending on the type of property and the local authority’s discretion.
While Empty Property Relief can provide some much-needed financial relief for property owners, it is important to note that it is only a temporary solution. Once the relief period expires, property owners will be required to resume paying business rates on the empty property unless they are able to secure a new tenant. This means that property owners must be proactive in their efforts to market and lease out their empty properties in order to avoid being hit with hefty business rates bills.
In addition to Empty Property Relief, some property owners may also be eligible for other forms of relief or discounts on their business rates. For example, properties that are undergoing major refurbishment or redevelopment may qualify for Renovation Relief, which offers a discount on business rates for a specified period of time. Property owners should check with their local authority to see if they qualify for any additional forms of relief that could help ease the burden of business rates on empty property.
Ultimately, the issue of business rates on empty property is a complex and challenging one for property owners to navigate. While measures such as Empty Property Relief can provide temporary respite, property owners must also take proactive steps to market and lease out their empty properties in order to avoid hefty business rates bills. By staying informed and exploring all available options for relief, property owners can better manage the financial implications of business rates on empty property and ensure the long-term viability of their investments.