The Impact Of Business Rates On Empty Shops

Business rates are a significant cost for businesses in the United Kingdom, and the rates on empty shops have been a source of contention for many years. As vacancy rates in towns and cities across the country continue to rise, the issue of business rates on empty shops has become increasingly important. In this article, we will explore the impact of business rates on empty shops and the challenges they pose for property owners and local communities.

Business rates are a tax that all non-domestic properties in the UK must pay. The rates are calculated based on the rateable value of a property and are used to fund local services provided by councils. However, when a property sits empty, property owners are still required to pay business rates, which can be a significant financial burden. In some cases, the rates on empty shops can be even higher than when the property is occupied, making it even more challenging for property owners to attract tenants.

One of the main reasons why business rates on empty shops are so high is the way they are calculated. The rates are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is supposed to reflect the annual rental value of a property, but in many cases, it does not accurately reflect the current market conditions. This means that property owners may be paying rates that are higher than what they would be able to charge in rent, making it financially unfeasible to rent out the property.

Another issue with business rates on empty shops is the impact they have on local communities. When shops sit empty for extended periods, it can have a negative effect on the overall attractiveness of an area. Empty shops can deter shoppers from visiting a town or city center, leading to a decline in foot traffic for other businesses. This can create a domino effect, with more shops closing down due to lack of customers, further exacerbating the issue of empty properties.

In recent years, the government has recognized the challenges posed by business rates on empty shops and has introduced some measures to address the issue. One such measure is the Empty Property Relief, which allows property owners to apply for a temporary exemption from paying business rates on empty properties. However, this relief is only available for a limited period, and the rates must still be paid after the exemption expires.

Many property owners have called for a more permanent solution to the problem of business rates on empty shops. Some have suggested that the rates should be based on the actual rent that the property could command in the current market, rather than the rateable value determined by the VOA. This would make it more financially feasible for property owners to rent out their vacant properties and would help to revitalize struggling town and city centers.

Local councils and business groups have also been lobbying for reform of the business rates system to make it fairer for property owners. They argue that the current system penalizes property owners for circumstances beyond their control, such as changes in the local economy or competition from online retailers. By reforming the business rates system, they believe that more properties could be brought back into use, benefiting both property owners and local communities.

In conclusion, business rates on empty shops are a significant challenge for property owners and local communities in the UK. The high rates on vacant properties make it financially unfeasible for property owners to rent out their shops, leading to a decline in town and city centers. While the government has taken some steps to address the issue, more needs to be done to reform the business rates system and make it fairer for property owners. By working together, local councils, business groups, and the government can help to revitalize struggling town and city centers and create vibrant, thriving communities.