Empty commercial property can be a major concern for property owners. Many factors can contribute to a property sitting empty, including changes in the local economy, shifts in technology, and even just bad luck. But one issue that often catches property owners off guard is the rates they have to pay on empty commercial property.
These rates can add up quickly and eat into the profitability of owning a commercial property. To avoid being blindsided by these costs, it is important for property owners to understand how rates on empty commercial property are calculated and what steps they can take to minimize them.
rates on empty commercial property are typically referred to as business rates in the United Kingdom. These rates are a tax that property owners must pay to local authorities on any non-domestic property, including commercial buildings, offices, and warehouses. The purpose of business rates is to fund local services and infrastructure, such as road maintenance and waste collection.
One misconception about business rates is that owners of empty commercial property are exempt from paying them. While it is true that owners of some types of empty properties may be eligible for temporary relief or exemptions, these are not guaranteed and can vary depending on the local authority and the circumstances of the property.
In England, for example, owners of empty commercial property are required to pay full business rates after the property has been empty for three months (six months for industrial properties). This can come as a shock to property owners who were expecting a grace period before having to pay these rates.
To avoid being caught off guard by rates on empty commercial property, property owners should take proactive steps to understand how they are calculated and what options are available to reduce them. One common way for owners to reduce business rates on empty commercial property is through the process of making a formal appeal.
Property owners have the right to appeal the rateable value of their property if they believe it is too high. This process involves submitting evidence to the Valuation Office Agency, which is responsible for valuing non-domestic properties in England and Wales. If successful, the rateable value of the property will be reduced, resulting in lower business rates.
Another way for property owners to reduce the rates on empty commercial property is by taking advantage of any available relief or exemptions. For example, owners of listed buildings, small properties, or properties in rural areas may be eligible for business rates relief. Owners should consult with their local authority to determine what options are available to them.
In addition to appealing the rateable value of the property and applying for relief, property owners can also take steps to reduce the risk of their property sitting empty in the first place. This may involve investing in improvements to the property to make it more attractive to potential tenants or buyers.
Property owners can also consider offering incentives, such as lower rent or flexible lease terms, to attract tenants to their property. By actively marketing the property and working with a commercial real estate agent, owners can increase the likelihood of finding a tenant and avoiding the costs associated with an empty property.
Overall, understanding rates on empty commercial property is essential for property owners looking to maximize profitability and minimize costs. By knowing how these rates are calculated, exploring options for reducing them, and taking steps to prevent properties from sitting empty, owners can protect their investment and ensure a steady income stream from their commercial properties.