When it comes to owning commercial property, one of the many expenses that can catch landlords off guard is rates payable on empty commercial property. These rates, also known as business rates or non-domestic rates, are taxes that commercial property owners must pay to the local government. While it may seem unfair to be taxed on a property that is not generating any income, understanding the reasons behind this tax and how it can be minimized can help landlords navigate this aspect of owning a commercial property.
rates payable on empty commercial property serve a couple of purposes. First, they are a way for the local government to generate revenue to fund essential services such as infrastructure, education, and emergency services. Commercial property owners benefit from these services just like any other citizen, so it is only fair that they contribute to their cost. Second, rates payable on empty commercial property are a way to discourage property owners from leaving their properties vacant for extended periods of time. By imposing a tax on empty properties, local governments hope to incentivize property owners to either rent out their properties or sell them to someone who will put them to productive use.
The amount of rates payable on empty commercial property is calculated based on the rateable value of the property. The rateable value is an estimate of the annual rent that the property could fetch on the open market as of a specific date. It is usually assessed by the local government’s valuation office. The actual amount of rates payable is determined by applying a multiplier, known as the uniform business rate (UBR), to the rateable value. The UBR is set by the government and is the same across England, Wales, and Scotland, while Northern Ireland has its own system. Each local authority has the discretion to apply a rate relief or discount on the business rates, if certain conditions are met.
For most landlords, the first three months following the property becoming empty are exempt from rates payable. This is to allow property owners some time to find a new tenant or make necessary repairs or renovations to the property before being hit with additional expenses. After the initial three-month exemption period, rates payable on empty commercial property will start to accrue.
There are ways for landlords to reduce the amount of rates payable on empty commercial property. One common strategy is to apply for exemptions or relief from the local authority. There are a few types of reliefs available, such as small business rate relief, rural rate relief, and charitable rate relief, each with its own eligibility criteria. For example, small business rate relief is available to businesses with a rateable value below a certain threshold, while charitable rate relief is available to properties occupied by registered charities. Landlords should consult with their local authority to see if they qualify for any of these reliefs.
Another way to reduce rates payable on empty commercial property is to let the property out on a short-term basis. Certain types of temporary lettings may qualify for property occupation relief, which allows landlords to receive a discount on the empty property rate. Short-term lettings can be useful for landlords who are in the process of finding a long-term tenant or who are using the property for a specific event or purpose for a limited time.
It is important for landlords to stay informed about the rates payable on empty commercial property, as the rules and regulations around this tax can vary from region to region. Keeping up to date with the latest developments in local government policies can help landlords take advantage of any relief or exemptions that may be available to them. In some cases, hiring a professional property management company to handle these matters can also be beneficial, as they will have the expertise and resources to navigate the intricacies of rates payable on empty commercial property.
In conclusion, rates payable on empty commercial property may seem like an unnecessary burden for landlords, but they serve an important purpose in funding essential services and incentivizing property owners to make productive use of their properties. By understanding the reasons behind this tax and exploring options for relief or exemptions, landlords can minimize the impact of rates payable on their bottom line. Staying informed and seeking professional guidance when needed can help landlords navigate this aspect of owning commercial property successfully.