When it comes to owning commercial property, managing business rates is an essential part of the process Business rates are taxes that are charged on most non-domestic properties, including shops, offices, industrial units, and warehouses These rates are calculated based on the rateable value of the property as determined by the Valuation Office Agency (VOA) However, what happens when a property becomes vacant? How are business rates affected when there are no tenants occupying the space? In this article, we will explore the concept of business rates for vacant property and discuss what property owners need to know.
Business rates for vacant property, also known as empty property rates, are a significant concern for commercial property owners When a property becomes vacant, the owner is still liable to pay business rates on the empty property This can come as a surprise to many property owners, especially if the property has been vacant for an extended period The rationale behind empty property rates is to discourage property owners from leaving their properties empty for prolonged periods and to incentivize them to find new tenants or buyers.
The way in which business rates for vacant property are calculated differs depending on the location of the property In England, for example, properties that have been empty for more than three months are subject to full business rates, which means that the owner must pay 100% of the usual rates In Scotland, the period is extended to six months before full rates are applied However, there are some exceptions and reliefs available to help property owners manage the cost of vacant property rates.
One of the most common reliefs available to property owners is the empty property relief This relief provides a 100% exemption from business rates for the first three months that a property is vacant in England, or the first six months in Scotland After this initial period, the owner will be required to pay the full business rates unless they qualify for another form of relief business rates vacant property. It is essential for property owners to be aware of the deadlines and requirements for applying for empty property relief to avoid being hit with unexpected costs.
Another form of relief that property owners may be eligible for is the unoccupied property rate This relief applies to properties that are undergoing major structural repairs or are otherwise unoccupied for a specific reason In England, properties may qualify for a 50% reduction in business rates if they meet the criteria for unoccupied property relief In Scotland, this reduction can be up to 10% Property owners must provide evidence to support their claim for this relief, and failure to do so may result in being charged the full rate.
It is also worth noting that there are additional reliefs available for certain types of properties, such as listed buildings, small business properties, and properties in designated Enterprise Zones Property owners should investigate all possible forms of relief that may apply to their specific situation to reduce the financial burden of vacant property rates.
In some cases, property owners may choose to actively market their vacant properties for sale or for lease to mitigate the impact of empty property rates By demonstrating that efforts are being made to find a new tenant or buyer, property owners may be able to secure a temporary reduction in business rates as part of a marketing relief scheme This can provide some breathing room for property owners while they search for a new occupant.
Overall, business rates for vacant property can be a significant financial concern for commercial property owners It is essential to be proactive in understanding the rules and regulations surrounding empty property rates and to explore all possible avenues for relief By staying informed and taking advantage of available reliefs, property owners can minimize the financial impact of vacant property rates and ensure that their properties remain viable assets in the long run.