Empty rates in commercial property are a significant concern for building owners and property investors These rates, also known as vacant property rates, are a tax that property owners must pay on commercial buildings that are empty and not being used Empty rates can be a significant financial burden for property owners, especially during times of economic downturn when vacancies are high.
Empty rates are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA) The rateable value is essentially an estimate of how much rent the property could fetch on the open market Property owners are required to pay empty rates at a rate of 50% of the rateable value if the property has been empty for more than three months (or six months for industrial properties).
One of the biggest challenges with empty rates is that property owners have little control over when their buildings become vacant Tenants may move out unexpectedly, or it may take time to find a new tenant for a property In the meantime, property owners are still responsible for paying empty rates, which can add up quickly and eat into their bottom line.
There are a few ways that property owners can try to mitigate the impact of empty rates on their finances One option is to try to negotiate a reduced rate with the local council The council has the discretion to reduce or waive empty rates in certain circumstances, such as if the property is undergoing substantial renovation or refurbishment.
Another option is to consider leasing the property on a short-term basis to a temporary tenant This can help generate some income from the property and reduce the amount of empty rates that need to be paid empty rates commercial property. However, property owners should be aware that this may not always be possible depending on the condition of the property and local regulations.
Property owners can also consider appealing the rateable value of their property with the VOA If the rateable value is deemed to be too high, property owners may be able to reduce their empty rates liability However, this process can be lengthy and may not always result in a lower rateable value.
It’s also worth noting that empty rates can have a negative impact on the wider economy High rates of empty properties can deter investment in an area and lead to a cycle of decline Property owners may be reluctant to invest in new developments if they fear that they will be hit with empty rates if the property is not immediately let.
In recent years, the government has taken steps to try to address the issue of empty rates in commercial property For example, in 2017, the government introduced a new relief scheme for empty properties in certain areas, which allowed property owners to claim relief on empty rates for a period of three months.
However, this relief scheme was only temporary and has since expired The government has faced calls to permanently reform the empty rates system to make it fairer for property owners, especially in light of the economic challenges brought about by the COVID-19 pandemic.
In conclusion, empty rates in commercial property can be a significant financial burden for property owners, especially during times of economic uncertainty Property owners should explore all available options to try to mitigate the impact of empty rates on their finances, such as negotiating with the council, leasing to temporary tenants, or appealing the rateable value of the property The government also has a role to play in addressing the issue of empty rates and ensuring that the system is fair and equitable for all property owners.