When it comes to owning commercial property, there are a multitude of costs and expenses that landlords must factor in. One of the most significant costs that property owners should be aware of is rates payable on empty commercial property. These rates, also known as business rates, can add up to a substantial amount, especially if the property remains vacant for an extended period of time. In this article, we will delve into the intricacies of rates payable on empty commercial property and how landlords can navigate this financial obligation.
Business rates are a form of tax that all commercial property owners are required to pay to their local council. The amount payable is based on the rateable value of the property, which is set by the Valuation Office Agency (VOA). The rateable value is an estimate of the annual rent that the property could achieve on the open market. The local council then applies a multiplier, also known as the Uniform Business Rate (UBR), to calculate the final amount that the property owner must pay.
One of the key considerations for commercial property owners is the impact of rates payable on empty properties. In the past, property owners could receive empty property relief, which meant that they were exempt from paying rates on properties that were unoccupied. However, changes in legislation have significantly reduced or even eliminated this relief in recent years, leaving many landlords facing substantial bills for empty properties.
In England, for example, the government introduced a policy that reduces the relief available for empty commercial properties. Previously, property owners could receive 100% relief for the first three months that a property remained vacant. After this initial period, the relief was reduced to 50%. However, as of April 2019, properties with a rateable value of over £2,900 are no longer eligible for this relief, meaning that landlords are now required to pay the full business rates on their empty properties.
This change has had a significant impact on landlords, particularly those who own multiple commercial properties or who are struggling to find tenants for their vacant units. The financial burden of paying rates on empty properties can be substantial, especially if the property remains unoccupied for an extended period of time. This has led to calls for the government to reconsider its policy on business rates and provide more support for property owners who are struggling to let their properties.
There are, however, some exemptions and reliefs that commercial property owners may be eligible for when it comes to rates payable on empty properties. For example, properties with a rateable value of under £2,900 are still eligible for 100% relief for the first three months that they remain vacant. Additionally, certain types of properties, such as agricultural buildings and buildings that are undergoing repairs or renovations, may also be eligible for relief.
Landlords should also be aware of the importance of keeping accurate records when it comes to rates payable on empty properties. Failure to pay the required amount or provide the necessary information to the local council can result in penalties and fines. It is essential for property owners to stay up to date with their obligations and seek advice from a professional if they are unsure of how to proceed.
In conclusion, rates payable on empty commercial property can be a significant financial burden for landlords. With changes in legislation reducing the relief available for empty properties, property owners must be vigilant in understanding their obligations and seeking support where necessary. By staying informed and seeking professional advice, landlords can navigate the complexities of rates payable on empty properties and minimize the financial impact on their businesses.