When it comes to owning commercial property, there are a whole host of expenses that landlords need to consider. One of those expenses is rates payable on empty commercial property. These rates can often be a point of contention for property owners, as they represent a significant cost that must be paid regardless of whether or not the property is generating any income. In this article, we will take a closer look at rates payable on empty commercial property, how they are calculated, and what property owners can do to minimize their impact.
rates payable on empty commercial property are taxes that are levied on commercial properties that are unoccupied. These rates are charged by local authorities and are based on the rateable value of the property. The rateable value is an estimate of the annual rental value of a property as determined by the Valuation Office Agency. It is important to note that the rateable value is not the same as the market value of the property, but rather an estimate of how much rent the property could reasonably be expected to generate.
The rates payable on empty commercial property are determined by multiplying the rateable value of the property by the multiplier set by the local authority. This multiplier is also known as the uniform business rate (UBR) and is set annually by the government. The current UBR for England for the 2021/2022 financial year is 49.9p, meaning that for every pound of rateable value, property owners will have to pay 49.9p in rates.
One of the main points of contention for property owners when it comes to rates payable on empty commercial property is the fact that they have to pay these rates even when the property is unoccupied. This can be particularly challenging for landlords who are struggling to find tenants for their property or who have had to close their businesses due to financial difficulties. In these cases, having to pay rates on top of other expenses can put a significant strain on finances.
There are, however, some exemptions and reliefs available to property owners when it comes to rates payable on empty commercial property. For example, properties that are unoccupied for a short period of time may be eligible for a small business rates relief, which can reduce the amount that needs to be paid. Additionally, properties that are undergoing major renovation or structural repairs may also be eligible for relief from rates. It is important for property owners to check with their local authority to see if they qualify for any exemptions or reliefs.
In recent years, there has been some discussion about potentially reforming the system of rates payable on empty commercial property. Some argue that the current system unfairly penalizes property owners who are struggling to find tenants or who are facing financial difficulties. There have been calls for the government to introduce more flexibility into the system, such as allowing property owners to apply for a temporary waiver of rates in certain circumstances.
In the meantime, there are some steps that property owners can take to minimize the impact of rates payable on empty commercial property. One option is to consider leasing out the property on a temporary basis, even if it is at a reduced rate. This can help to generate some income from the property and reduce the overall amount that needs to be paid in rates. Another option is to invest in marketing and advertising to attract new tenants to the property, thus reducing the amount of time that it sits empty and accrues rates.
Overall, rates payable on empty commercial property are a significant cost that property owners need to consider when owning commercial property. While it can be challenging to have to pay rates on an unoccupied property, there are exemptions and reliefs available that can help to lessen the financial burden. By exploring these options and taking proactive steps to attract tenants to the property, landlords can minimize the impact of rates payable on empty commercial property and ensure that their investment remains profitable.