When it comes to owning commercial property, there are a multitude of expenses that come with it. From maintenance and utilities to insurance and taxes, the costs can quickly add up. One particular expense that property owners should be aware of is business rates on vacant property.
Business rates, also known as non-domestic rates, are a tax on commercial property that helps fund local services. Property owners are required to pay business rates whether their property is occupied or vacant. However, there are some important considerations to keep in mind when it comes to business rates on vacant property.
First and foremost, it’s important to understand that business rates are based on the rateable value of a property. The rateable value is an estimate of the yearly rental value of a property and is determined by the Valuation Office Agency (VOA). This value is then used to calculate the business rates that are due.
In general, if a property is vacant, the rateable value will be based on its market rental value. This means that even if a property is not generating any rental income, property owners are still required to pay business rates on it. However, there are some exemptions and discounts available for vacant properties.
One exemption that property owners may be able to take advantage of is the empty property rate relief. This relief applies to properties that have been vacant for a certain period of time, typically three months or more. During this period, eligible properties may qualify for a 100% exemption on their business rates. After the initial exemption period, the property may still be eligible for a further 50% discount on the business rates.
It’s important for property owners to be aware of the specific regulations and criteria for empty property rate relief in their area. Additionally, it’s worth noting that some properties, such as industrial buildings or listed buildings, may be exempt from business rates altogether, regardless of whether they are occupied or vacant.
In some cases, property owners may choose to actively keep a property vacant in order to avoid paying business rates. However, it’s important to be aware that local authorities have the power to investigate and challenge empty property rate relief claims. If it is found that a property owner is intentionally keeping a property vacant to avoid paying business rates, they may face penalties and fines.
Property owners should also be aware of the implications of leaving a property vacant for an extended period of time. Vacant properties can become targets for vandalism, squatting, and other criminal activities. Additionally, neglecting a property can lead to deterioration and decrease its overall value. Therefore, it’s important for property owners to consider the costs and risks associated with leaving a property vacant versus actively seeking tenants or finding alternative uses for the property.
In conclusion, business rates on vacant property are an important consideration for commercial property owners. While it may be tempting to keep a property vacant to avoid paying business rates, property owners should be aware of the regulations and potential consequences of doing so. By understanding the rules and regulations surrounding business rates on vacant property, property owners can make informed decisions about how to best manage their properties and minimize their expenses.