Vacant properties can be a burden for property owners, not only due to maintenance costs but also because of the potential liability for business rates. When a property is left unoccupied, it may still be subject to business rates, often referred to as “vacant property business rates.” In this article, we will delve deeper into what vacant property business rates are, how they are calculated, and what property owners can do to minimize their impact.
What are vacant property business rates?
Vacant property business rates are taxes imposed by local authorities on commercial properties that are unoccupied for an extended period of time. The rationale behind this tax is to incentivize property owners to put their empty properties back into use, thus contributing to the local economy and community.
Business rates are a form of property tax that applies to most non-domestic properties, including shops, offices, warehouses, and factories. When a commercial property becomes vacant, the owner is still liable to pay business rates, albeit at a reduced rate. This is known as vacant property business rates.
How are vacant property business rates Calculated?
The rateable value of a property, which is determined by the Valuation Office Agency (VOA), forms the basis for calculating business rates. When a property becomes vacant, the business rates liability typically changes as follows:
– For the first three months of vacancy, the property owner is exempt from paying business rates.
– After the initial three-month period, the property owner is required to pay 100% of the basic occupied business rate, unless the property falls within one of the exempt categories.
– After a further three months, the property owner may be eligible for a 50% discount on the business rates, known as the empty property rate relief.
Certain types of properties may be exempt from business rates altogether, such as listed buildings, properties with a rateable value below a certain threshold, or those that are eligible for small business rate relief.
Minimizing the Impact of vacant property business rates
Property owners can take several steps to minimize the impact of vacant property business rates on their finances. Some of these strategies include:
1. Negotiating with the Local Authority: Property owners may be able to negotiate a temporary reduction or waiver of vacant property business rates with the local authority, particularly if they can demonstrate that they are actively seeking to rent or sell the property.
2. Temporary Use of the Property: To avoid being classified as vacant, property owners can consider temporary uses for their properties, such as hosting events, pop-up shops, or short-term leases. This can help generate income and potentially attract long-term tenants.
3. Considering Property Guardianship: Property guardianship involves placing temporary occupants in vacant properties to help deter vandalism, squatting, and other risks associated with empty buildings. While property guardianship can help reduce the liability for vacant property business rates, property owners should carefully vet potential guardians to ensure the security of their property.
4. Seeking Professional Advice: Property owners grappling with vacant property business rates may benefit from seeking advice from a qualified surveyor or property consultant. These professionals can provide guidance on minimizing business rates liability, exploring relief options, and navigating the complexities of property taxation.
In conclusion, vacant property business rates can pose a significant financial burden for property owners, particularly in the case of long-term vacancies. Understanding how business rates are calculated, exploring relief options, and considering proactive strategies can help property owners mitigate the impact of vacant property business rates on their bottom line. By staying informed and taking proactive steps, property owners can navigate the challenges of vacant properties while working towards a more sustainable and profitable use of their assets.