When it comes to owning commercial property, there are many expenses that come with the territory. One of these expenses that can catch property owners off guard is the rates payable on empty commercial property. These rates are often overlooked or not fully understood, leading to financial headaches for property owners. In this article, we will delve into what rates payable on empty commercial property are, how they are calculated, and what property owners can do to minimize these costs.
rates payable on empty commercial property, also known as empty property rates or unoccupied property rates, are taxes that property owners must pay on commercial properties that are not currently being used or occupied. These rates are separate from regular business rates and apply to properties that are unoccupied for a certain period of time. The purpose of these rates is to encourage property owners to find tenants for their empty properties and prevent them from leaving buildings vacant for extended periods.
The rates payable on empty commercial property are calculated based on the rateable value of the property. The rateable value is an estimate of the property’s open market rental value as determined by the Valuation Office Agency (VOA). Property owners can find out the rateable value of their property by contacting the VOA or looking it up on their website. Once the rateable value is known, the rates payable on empty commercial property can be calculated by applying a multiplier set by the government.
In England, the government sets the multiplier for empty property rates at 3.0 times the standard business rates multiplier. This means that property owners must pay three times the normal business rates on their empty commercial properties. However, there are some exceptions to this rule. For example, properties with a rateable value of less than £2,600 are exempt from empty property rates. Additionally, certain industrial properties may be exempt from empty property rates for a limited period.
In Scotland, the rules are slightly different. The multiplier for empty property rates is set at 2.6 times the standard business rates multiplier. However, properties may be exempt from empty property rates for up to three months if they are undergoing repairs or structural alterations. After the three-month period, property owners must start paying empty property rates unless they can prove that they are actively seeking tenants for the property.
In Wales, the multiplier for empty property rates is 2.6 times the standard business rates multiplier, similar to Scotland. However, there are some additional exemptions for properties that are actively being marketed for sale or rent. Property owners must still pay empty property rates on these properties, but they may be eligible for a discount of up to 100% if they can prove that they are making efforts to find tenants.
It is important for property owners to be aware of the rates payable on empty commercial property and to plan for these expenses accordingly. Leaving a property empty for an extended period without considering the financial implications can lead to hefty tax bills and financial strain. Property owners should take proactive steps to find tenants for their empty properties or explore other options, such as short-term leases or temporary uses, to minimize empty property rates.
There are also ways for property owners to reduce the amount of empty property rates they must pay. For example, property owners can apply for rate relief or exemptions if their property is undergoing renovations or repairs. They can also consider renting out part of the property to reduce the overall rateable value and lower the amount of empty property rates owed. Additionally, property owners can explore options for temporary uses of their empty properties, such as pop-up shops or events, to generate income and offset the costs of empty property rates.
In conclusion, rates payable on empty commercial property are an important consideration for property owners. Understanding how these rates are calculated and taking proactive steps to minimize these costs can help property owners avoid financial headaches and make the most of their commercial properties. By staying informed and exploring all available options, property owners can navigate the complexities of empty property rates and protect their bottom line.