When it comes to owning or leasing commercial property, there are numerous expenses that businesses must account for. One significant cost that often catches property owners off guard is the rates payable on empty commercial property. This expense, often overlooked or misunderstood, can have a significant impact on a company’s bottom line.
rates payable on empty commercial property refer to the business rates that are still charged even when a property is vacant. These rates are charged by the local government and are intended to contribute to the cost of providing local services, such as roads, schools, and emergency services. While it may seem unfair to levy such charges on properties that are not generating income, there are reasons behind this policy.
One of the main reasons for charging rates on empty commercial properties is to discourage property owners from leaving their properties vacant for extended periods. Vacant properties can have a negative impact on the surrounding area by attracting crime, lowering property values, and reducing foot traffic for local businesses. By charging rates on empty properties, local governments hope to incentivize property owners to either occupy or sell their properties to someone who will.
In addition to discouraging vacancy, charging rates on empty commercial properties also helps to ensure that all property owners contribute to the cost of local services. Without this policy, some property owners may choose to keep their properties vacant in order to avoid paying rates, shifting the burden onto other businesses and property owners in the area.
It’s important for businesses to understand how rates are calculated on empty commercial properties. The rateable value of a property is assessed by the local government and is based on factors such as the size, location, and condition of the property. This rateable value is then used to calculate the rates payable by applying a multiplier set by the government.
The multiplier, also known as the uniform business rate (UBR), is set annually by the government and is applied to the rateable value of a property to determine the total rates payable. The current UBR in England for the 2021/22 tax year is 49.9p, meaning that for a property with a rateable value of £10,000, the annual rates payable would be £4,990.
It’s worth noting that there are some exceptions to the rules regarding rates payable on empty commercial properties. For example, newly built properties are given a grace period of three months before rates are charged, allowing businesses time to find tenants or buyers. Some properties may also be exempt from rates altogether, such as agricultural land or properties used for charitable purposes.
For businesses that find themselves struggling to pay rates on empty commercial properties, there are options available to help alleviate the financial burden. One common option is to apply for empty property rate relief, which can provide a temporary reduction or exemption from rates for certain types of properties. This relief is typically available for properties that are being renovated or are temporarily unoccupied due to circumstances beyond the owner’s control.
Another option for businesses facing high rates on empty properties is to consider leasing or subletting the space to generate income. By finding a tenant or subtenant, businesses can not only offset the cost of rates but also generate additional revenue from rent payments.
Overall, rates payable on empty commercial properties can be a significant expense for businesses, but it’s important for property owners to understand the reasons behind these charges and to explore options for mitigating the financial impact. By staying informed and proactive, businesses can navigate the challenges of owning or leasing commercial property and work towards a more sustainable financial future.