When it comes to owning commercial property, there are a lot of costs to consider. One of the costs that can catch many property owners off guard is the rates payable on empty commercial property. This expense can add up quickly and significantly impact the profitability of owning commercial real estate. In this article, we will discuss what rates payable on empty commercial property are, how they are calculated, and some strategies for minimizing this cost.
rates payable on empty commercial property, also known as business rates, are a tax levied by local authorities in the United Kingdom on non-domestic properties. These rates are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is an estimate of the open market rental value of the property as of a certain date.
The rates payable on empty commercial property can be a substantial cost for property owners. In England, for example, the standard multiplier for calculating business rates is 49.9p for the 2021/2022 financial year. This means that for a property with a rateable value of £20,000, the annual business rates bill would be £9,980. For property owners with multiple properties or large rateable values, this cost can quickly add up.
One of the most challenging aspects of rates payable on empty commercial property is that property owners are still required to pay them even if the property is vacant. This means that even if a property is not generating any income, the owner is still responsible for paying the business rates. This can be a significant burden for property owners, especially during periods of economic downturn or when the property market is slow.
There are, however, some exemptions and reliefs available to property owners to help reduce the cost of rates payable on empty commercial property. One common exemption is for properties with a rateable value of £2,900 or lower. These properties are not required to pay any business rates. Additionally, properties that are used for certain purposes, such as agricultural or charitable purposes, may be eligible for relief from business rates.
Property owners can also apply for empty property relief, which provides a 100% discount on business rates for the first three months that a property is empty. After the initial three months, the property owner may be eligible for a 50% discount on the business rates if the property remains vacant. This relief can help offset some of the costs associated with owning empty commercial property.
Another option for property owners looking to reduce their rates payable on empty commercial property is to explore ways to bring in temporary tenants or use the property for alternate purposes. By generating some income from the property, even if it is not the property’s primary use, property owners can reduce the business rates bill while still keeping the property occupied.
It is essential for property owners to stay informed about changes to the business rates system and any available reliefs or exemptions. The rates payable on empty commercial property can vary from year to year, so it is crucial to regularly review the property’s rateable value and explore options for reducing the business rates bill.
In conclusion, rates payable on empty commercial property can be a significant cost for property owners. Understanding how these rates are calculated and exploring options for exemptions and relief can help property owners minimize this expense. By staying informed and proactive, property owners can better manage the costs associated with owning empty commercial property and maximize their profitability.