When it comes to owning commercial property, there are various costs and responsibilities that come with the territory. One of the most significant expenses that property owners need to consider is the business rates, which are a form of property tax levied by local authorities. While business rates are typically based on the rental value of a property, what happens when a property is left vacant? In this article, we will explore the implications of business rates on vacant property and how property owners can navigate this challenging scenario.
Business rates are a crucial source of revenue for local authorities, as they help fund essential services such as schools, roads, and emergency services. These rates are calculated based on the rateable value of a property, which is assessed by the Valuation Office Agency (VOA). The rateable value is then multiplied by the “multiplier,” which is set by the government each year, to determine the final amount that needs to be paid by the property owner.
For businesses that operate out of commercial properties, paying business rates is a standard part of their overhead costs. However, when a property is left vacant, property owners may find themselves facing a hefty bill for business rates on a property that is not generating any income. This can be a significant burden, especially for small businesses or property owners who are struggling financially.
In the past, there were exemptions and relief schemes in place for vacant properties, which provided some respite for property owners. However, in recent years, the government has introduced changes to these relief schemes, making it more challenging for property owners to avoid paying business rates on vacant properties.
One of the most notable changes introduced by the government is the removal of the empty property rate relief, which previously provided a 100% discount on business rates for vacant properties for the first three months, and a 50% discount thereafter. With this relief no longer available, property owners are now required to pay the full business rates on their vacant properties from day one of vacancy.
This change has had a significant impact on property owners, especially those who own multiple vacant properties or properties that have been difficult to lease out. In some cases, property owners have had to sell off their vacant properties to avoid the high costs of business rates, leading to a decrease in the supply of commercial properties in certain areas.
So, what options do property owners have when it comes to dealing with business rates on vacant properties? One possible solution is to explore the option of applying for a “hardship relief” from the local authority. This relief is granted on a discretionary basis and is intended to provide temporary assistance to property owners who are facing financial difficulties due to business rates on vacant properties.
Another option for property owners is to consider leasing out their vacant properties on a short-term basis to generate some income and avoid paying the full business rates. While this may not be a long-term solution, it can help alleviate some of the financial burden associated with owning a vacant property.
Property owners can also explore the possibility of appealing the rateable value of their vacant properties with the VOA. If they believe that the rateable value has been assessed incorrectly, they can challenge the valuation and potentially reduce the amount of business rates that they are required to pay.
Overall, the impact of business rates on vacant properties can be significant, especially for property owners who are already facing financial challenges. It is essential for property owners to be aware of their obligations regarding business rates and to explore all possible options for mitigating the financial burden associated with owning vacant properties.
In conclusion, understanding the implications of business rates on vacant properties is crucial for property owners. By exploring options such as hardship relief, short-term leasing, and appealing rateable values, property owners can navigate the challenges associated with paying business rates on properties that are not generating any income. As the government continues to make changes to relief schemes, it is essential for property owners to stay informed and proactive in managing their vacant properties.