Understanding Rates Payable On Empty Commercial Property

When owning a commercial property, there are numerous costs that need to be considered in addition to the initial purchase price. One such cost that is often overlooked by property owners is the rates payable on empty commercial property. These rates, also known as business rates, can represent a significant financial burden for property owners, especially if the property remains vacant for an extended period of time.

Business rates are a tax that is levied on most non-domestic properties, including commercial buildings, offices, shops, warehouses, and factories. These rates are charged by local authorities and are calculated based on the rateable value of the property. The rateable value is a valuation set by the Valuation Office Agency (VOA) and represents the estimated annual rental value of the property. The local authority multiplies the rateable value by a multiplier set by the government to determine the annual business rates bill.

For occupied commercial properties, the responsibility of paying business rates falls on the tenant or the business occupying the premises. However, in the case of empty commercial properties, the burden of paying business rates falls on the property owner. This can be a major concern for property owners, especially in a challenging economic climate where finding tenants for commercial properties can be difficult.

In an effort to alleviate the burden on property owners, the government has introduced several relief schemes for empty commercial properties. One such relief scheme is the Empty Property Relief, which provides a 100% relief on business rates for the first three months that a property is empty. This relief can provide some financial assistance to property owners as they search for new tenants or decide on the future use of the property.

After the initial three-month period, the level of relief that is available on empty commercial properties varies depending on the local authority. Some local authorities may continue to provide a 100% relief for a further three months, while others may reduce the relief to 50% or remove it altogether. It is important for property owners to check with their local authority to understand the specific relief schemes that are available in their area.

In addition to Empty Property Relief, there are other relief schemes that property owners may be eligible for, such as Hardship Relief and Charitable Relief. Hardship Relief is available for property owners who are experiencing financial hardship and are struggling to pay their business rates. Charitable Relief is available for properties that are used by registered charities or for charitable purposes.

While relief schemes can provide some assistance to property owners, it is important to be proactive in managing empty commercial properties to minimize the financial impact of business rates. One way to reduce business rates on empty properties is to consider temporary uses for the space, such as hosting pop-up shops, events, or exhibitions. By temporarily using the property, property owners may be able to qualify for relief under the Temporary Discretionary Relief scheme.

Another strategy to reduce business rates on empty commercial properties is to consider applying for a material change of use. Changing the use of the property from a commercial space to a residential space, for example, may result in a lower business rates bill or even exemption from business rates altogether. Property owners should consult with their local authority and a professional advisor to understand the implications of a change of use on business rates.

In conclusion, rates payable on empty commercial property can represent a significant financial burden for property owners. It is important for property owners to be aware of the relief schemes available to them and to explore proactive strategies for managing empty properties to minimize the impact of business rates. By staying informed and taking proactive steps, property owners can navigate the challenges of owning empty commercial properties and protect their financial interests.