When a business property sits empty, it can be a financial burden for the owner. Not only are they missing out on potential rental income, but they are also still responsible for paying unoccupied business rates. These rates, also known as empty property rates, are a tax imposed on properties that are not being used for business purposes.
It’s important for business owners and property investors to understand unoccupied business rates and how they can impact their bottom line. In this article, we will explore what unoccupied business rates are, how they are calculated, and what owners can do to minimize their impact.
unoccupied business rates are essentially a tax levied by local authorities on empty commercial properties. The idea behind these rates is to encourage property owners to actively use their spaces or sell them, rather than leaving them empty for extended periods of time.
The rates are usually set at 100% of the property’s rateable value for the first three months of vacancy. After that initial period, the rates can increase to 200% of the rateable value for properties that have been empty for more than three months. This steep increase is meant to incentivize property owners to take action and find a tenant or buyer for their empty property.
Calculating unoccupied business rates can be a bit complicated, as they are based on the rateable value of the property and the local authority’s multiplier. The rateable value is essentially the rental value of the property as assessed by the Valuation Office Agency (VOA). The local authority’s multiplier is the rate at which the property’s rateable value is taxed.
To give an example of how unoccupied business rates are calculated, let’s say a property has a rateable value of £20,000 and the local authority’s multiplier is 0.5. For the first three months of vacancy, the property owner would have to pay £10,000 in unoccupied business rates. After three months, the rates would increase to £20,000 per year.
So, what can property owners do to minimize the impact of unoccupied business rates on their finances? One option is to actively market the property for rent or sale. By finding a tenant or buyer quickly, owners can avoid paying the increased rates that kick in after three months of vacancy.
Another option is to speak with the local authority about potential exemptions or relief schemes that may be available. Some authorities offer exemptions for newly built properties or those undergoing major renovations. Owners may also be able to apply for a temporary relief scheme to help offset the cost of unoccupied business rates.
Property owners should also consider investing in security measures to protect their empty properties from vandalism and squatting. Not only can these measures help maintain the value of the property, but they can also demonstrate to the local authority that the owner is actively taking steps to manage the property and find a new tenant.
Overall, understanding unoccupied business rates is crucial for property owners and investors. By being aware of the potential financial impact of leaving a property empty, owners can take proactive steps to minimize the burden and potentially turn their empty property into a profitable asset. Whether it’s actively marketing the property, seeking exemptions or relief schemes, or investing in security measures, there are ways to mitigate the impact of unoccupied business rates and protect your bottom line.