vacant property business rates, also known as empty property rates, can be a significant concern for property owners and investors. When a property sits empty, the owner is often still required to pay business rates, which are taxes levied on non-residential properties. This can be a significant financial burden, especially in cases where a property remains empty for an extended period of time. In this article, we will explore the ins and outs of vacant property business rates, including how they are calculated and ways to potentially reduce or mitigate these costs.
Business rates are a tax levied by local authorities on most non-domestic properties, including shops, offices, warehouses, and factories. The rates are calculated based on the rateable value of the property, which is set by the Valuation Office Agency (VOA). The current rateable value of a property is multiplied by the national non-domestic multiplier to determine the amount of business rates owed.
However, when a property becomes vacant, the rules surrounding business rates can change. In the United Kingdom, most empty non-domestic properties are exempt from business rates for the first three months after becoming vacant. After this initial three-month period, the property owner is usually required to pay full business rates unless they qualify for an exemption or relief.
One way to potentially reduce vacant property business rates is by applying for an exemption or relief. There are several types of exemptions and reliefs available for vacant properties, depending on the specific circumstances. For example, properties with a rateable value of less than £2,900 are exempt from business rates, even if they are empty. Additionally, properties undergoing major renovation or structural repairs may be eligible for an exemption from business rates for a limited period.
Another option for reducing vacant property business rates is to apply for a discretionary relief from the local council. Local authorities have the power to grant discretionary relief to property owners who they believe are facing hardship due to high business rates. This relief is usually granted on a case-by-case basis and may require the property owner to provide evidence of their financial situation.
Some property owners may also be able to reduce their vacant property business rates by taking steps to actively market and occupy the property. For example, if a property owner can demonstrate that they are actively seeking tenants or buyers for the vacant property, they may be eligible for a 50% discount on their business rates. This discount is intended to incentivize property owners to make efforts to bring their property back into productive use.
In some cases, property owners may consider demolishing the vacant property in order to avoid paying business rates. However, this strategy may not always be effective, as local authorities have the power to charge business rates on land that was previously occupied by a building for up to three years after the building is demolished. It is important for property owners to carefully consider the potential costs and benefits of demolition before taking this step.
Overall, vacant property business rates can be a complex and costly issue for property owners and investors. It is important for property owners to be aware of their obligations regarding business rates and to explore all available options for reducing or mitigating these costs. By applying for exemptions or reliefs, actively marketing the property, or seeking discretionary relief from the local council, property owners may be able to lessen the financial burden of vacant property business rates.