Business rates are a necessary evil for any commercial property owner. These rates are a tax levied by local authorities on non-residential properties, such as offices, shops, and factories. However, what happens when a commercial property sits empty? Do owners still have to pay business rates on empty buildings? The short answer is yes.
The legislation around business rates on empty commercial property can be a bit complex and confusing for property owners. To help navigate this issue, it is essential to understand the rules and regulations surrounding business rates and what options are available to owners of empty commercial properties.
Business rates are a tax on non-residential properties in the UK, and they are calculated based on the rateable value of the property. The rateable value is an estimate of the annual rental value of the property on a certain date, set by the Valuation Office Agency (VOA). The rates themselves are set by the government and local authorities, and they are used to help fund local services such as roads, schools, and waste collection.
When a commercial property is empty, the owner is still required to pay business rates on the property, albeit at a reduced rate. Historically, owners of empty commercial properties were granted a full exemption from paying business rates for three months after the property became vacant. However, in 2008, the government changed the legislation around business rates on empty buildings.
Under the current rules, owners of commercial properties that have been empty for more than three months are required to pay business rates at a reduced rate of 50%. This rate applies to most types of non-residential properties, including shops, offices, factories, and warehouses. The reduced rate is intended to encourage property owners to either occupy or redevelop their empty properties rather than allowing them to sit vacant for extended periods.
There are some exceptions to the 50% rate. For example, some types of properties, such as listed buildings and properties with a rateable value of less than £2,900, may be eligible for full exemption from business rates. Additionally, properties that are undergoing major structural repairs or undergoing certain types of industrial processes may be eligible for an extended exemption from paying business rates.
Some local authorities may also offer discretionary rates relief for certain types of empty properties or for properties in specific areas that are experiencing economic hardship. Property owners should check with their local council to see if they qualify for any additional relief or exemptions from paying business rates on empty commercial properties.
In certain circumstances, property owners may also be able to appeal their business rates assessment if they believe it to be incorrect. The Valuation Office Agency (VOA) is responsible for assessing the rateable value of properties, and property owners can challenge their assessment if they believe it to be too high. This process can be complex and time-consuming, so property owners may want to seek professional advice from a chartered surveyor or property consultant to help navigate this process.
In addition to paying business rates on empty commercial properties, owners may also be responsible for other costs associated with maintaining vacant buildings. These costs can include insurance, security, utilities, and maintenance expenses. Property owners should consider these additional costs when budgeting for an empty property and factor them into their overall financial planning.
Overall, business rates on empty commercial properties can be a significant financial burden for property owners. However, there are options available to owners to help reduce this burden, such as seeking exemptions, applying for discretionary relief, or appealing their rates assessment. By understanding the rules and regulations surrounding business rates on empty buildings and exploring all available options, property owners can navigate this complex issue and make informed decisions about their vacant properties.