Navigating Rates Payable On Empty Commercial Property

When it comes to owning commercial property, one of the unavoidable costs that property owners face is business rates. These rates are charged by local councils on most non-domestic properties, including shops, offices, pubs, warehouses, and factories. However, what many property owners may not be aware of is that even if their commercial property is sitting empty, they may still be liable to pay business rates. In this article, we will explore the intricacies of rates payable on empty commercial property and what property owners can do to minimize their financial burden.

The rules surrounding business rates on empty commercial property can be complex and confusing. According to the government’s official guidance, businesses are generally required to pay business rates on empty properties, with a few exceptions. The most common exception is when a property qualifies for small business rate relief. In England, for example, properties with a rateable value of less than £2,900 are eligible for 100% rate relief, while properties with a rateable value between £2,900 and £12,000 are eligible for tapered relief.

In addition to small business rate relief, certain types of properties are exempt from paying business rates on empty buildings. These include properties owned by charities, community amateur sports clubs, industrial premises with a rateable value under £2,900, and certain properties with an agricultural exemption. Property owners should check with their local council to see if their property falls under any of these exemptions.

For most property owners, however, the reality is that they will be required to pay business rates on their empty commercial property. In England, for example, the rates payable on empty commercial property are as follows:

– Properties that have been empty for less than three months: 100% of the full business rates
– Properties that have been empty for more than three months: 150% of the full business rates

This means that the longer a property remains empty, the higher the rates payable. This can pose a significant financial burden on property owners, especially during times of economic downturn or when the property market is slow.

One way for property owners to mitigate the cost of business rates on empty commercial property is to look into temporary reliefs or exemptions. For example, in response to the COVID-19 pandemic, the UK government introduced a business rates holiday for retail, leisure, and hospitality businesses, as well as nurseries, for the 2020-2021 tax year. This provided much-needed relief for property owners who were struggling to pay their business rates due to the impact of the pandemic.

In addition to temporary reliefs, property owners can also explore other ways to reduce their business rates liability. This may include negotiating with the local council for a reduction in rates based on the property’s current market value, or exploring the possibility of converting the property for temporary use to avoid paying the increased rates on long-term empty properties.

Furthermore, property owners should also be aware of their rights when it comes to challenging their business rates assessment. If they believe that their property has been incorrectly assessed or that they are being charged unfairly, they have the right to appeal to the Valuation Office Agency (VOA) in England, the Scottish Assessors Association in Scotland, or the Land and Property Services in Northern Ireland.

In conclusion, rates payable on empty commercial property can be a significant expense for property owners. However, by understanding the rules and regulations surrounding business rates, exploring temporary reliefs and exemptions, negotiating with the local council, and challenging their assessment if necessary, property owners can take proactive steps to minimize their financial burden. Ultimately, staying informed and proactive is key to navigating the complex world of business rates on empty commercial property.