When it comes to owning commercial property, one of the costs that owners need to be aware of is the rates payable on empty commercial property. These rates can be a significant financial burden for property owners, especially if the property remains vacant for an extended period of time. In this article, we will explore what rates are payable on empty commercial property, how they are calculated, and what steps owners can take to mitigate these costs.
What are Rates Payable on Empty Commercial Property?
Rates, also known as business rates, are a form of local taxation that is levied on commercial properties in the UK. These rates are used to fund local services such as schools, roads, and police services. The amount of rates payable on a commercial property is determined by the rateable value of the property, which is assessed by the Valuation Office Agency (VOA).
When a commercial property is empty, the owner is still required to pay rates on the property. This is known as empty property rates or non-domestic rates. The rationale behind this is to discourage property owners from leaving properties vacant and to encourage them to bring properties back into use. However, the rates payable on empty commercial property are typically lower than the rates payable on an occupied property.
How are Rates Payable on Empty Commercial Property Calculated?
The rates payable on empty commercial property are calculated based on the rateable value of the property and the applicable multiplier set by the government. The rateable value is assessed by the VOA and is based on the rental value of the property. The multiplier, also known as the uniform business rate (UBR), is set by the government and is used to calculate the rates payable on a property.
For the financial year 2021-22, the standard multiplier for England is 51.2p, while for Wales, it is 53.5p. The multiplier is applied to the rateable value of the property to calculate the annual rates payable.
There are also certain reliefs and exemptions available for empty commercial properties that owners can look into to reduce the rates payable. For example, properties with a rateable value of less than £2,600 are exempt from paying rates, and properties that are undergoing major renovation or are listed may be eligible for relief.
Mitigating the Costs of Rates Payable on Empty Commercial Property
Given that rates payable on empty commercial property can be a significant expense for property owners, especially if the property remains vacant for a long period of time, it is important to explore ways to mitigate these costs.
One option for property owners is to consider letting out the property on a short-term basis. By doing so, owners may be able to reduce the rates payable on the property as it will no longer be considered empty. This can also generate some income while the property is vacant, helping to offset the costs of rates.
Another option is to consider appealing the rateable value of the property with the VOA. If owners believe that the rateable value of the property is too high, they can request a reassessment of the property. If successful, this could result in a lower rateable value and, therefore, lower rates payable.
Owners can also explore other ways to make use of the property while it is vacant, such as using it for storage or as a pop-up shop. By finding alternative uses for the property, owners may be able to reduce the rates payable and generate some income in the meantime.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners. Understanding how these rates are calculated and exploring ways to mitigate these costs can help owners manage their expenses more effectively. By exploring options such as letting out the property on a short-term basis, appealing the rateable value, or finding alternative uses for the property, owners can reduce the financial impact of rates payable on empty commercial property.