When it comes to owning commercial property, there are numerous costs and responsibilities that come with it. One of the most important expenses to consider is the rates payable on empty commercial property. This is a cost that many property owners may not be aware of or fully understand, but it can have a significant impact on their bottom line. In this article, we will take a closer look at what rates payable on empty commercial property are, how they are calculated, and what property owners can do to minimize this cost.
rates payable on empty commercial property, often referred to simply as empty rates, are a form of local taxation that is levied on commercial properties that are unoccupied. The purpose of empty rates is to incentivize property owners to keep their properties occupied, as vacant properties can have a negative impact on the local economy and community. Empty rates are typically charged by local authorities, based on the rateable value of the property.
The rateable value of a property is determined by the Valuation Office Agency (VOA), and is used by local authorities to calculate the rates payable by the property owner. The rateable value is an estimate of the annual rental value of the property, assuming it was let on the open market. The rates payable on empty commercial property are usually calculated as a percentage of the rateable value, with the exact percentage varying depending on the local authority and the specific circumstances of the property.
It is important to note that not all empty commercial properties are subject to rates payable. There are certain exemptions and reliefs that property owners may be eligible for, which can help reduce or eliminate the cost of empty rates. For example, if the property is undergoing major refurbishment or structural repairs, it may be eligible for a temporary exemption from empty rates. Similarly, if the property is listed or has historical significance, it may be eligible for relief from empty rates.
Property owners can also take steps to minimize their liability for empty rates by actively marketing the property for rent or sale. Local authorities may consider granting a temporary exemption from empty rates if the property is actively being marketed with the intention of finding a tenant or buyer. Property owners should keep detailed records of their marketing efforts, including any correspondence with potential tenants or buyers, to support their case for a temporary exemption.
Another option for property owners looking to reduce their liability for empty rates is to consider entering into a short-term lease or license agreement with a temporary occupier. By allowing a short-term tenant to occupy the property, even for a brief period, property owners may be able to qualify for a reduction in the rates payable on the property. It is important to note that any lease or license agreement should be carefully drafted to ensure that the property owner retains control over the property and can end the arrangement quickly if necessary.
In some cases, property owners may find themselves facing empty rates unexpectedly, such as when a tenant vacates the property suddenly or goes out of business. In these situations, it is important to act quickly to minimize the cost of empty rates. Property owners should notify their local authority as soon as possible of the vacancy, and provide any relevant information or documentation to support their case for relief or exemption.
Overall, rates payable on empty commercial property can be a significant expense for property owners, but there are steps that can be taken to minimize this cost. By understanding the factors that influence empty rates, actively marketing the property for rent or sale, and considering short-term lease or license agreements, property owners can reduce their liability for empty rates and maximize the value of their commercial property.