Empty business rates, also known as vacant property rates, can be a significant burden for businesses that find themselves with empty commercial premises. These rates are charged on commercial properties that have been empty for a certain period of time, typically three months or more. They are imposed by local authorities as a way to encourage property owners to bring empty properties back into use and prevent them from becoming eyesores in the community.
Empty business rates can be a major headache for business owners, especially during tough economic times when finding new tenants for vacant properties can be a challenge. In some cases, the cost of empty business rates can actually be higher than the potential rental income from the property, making it unfeasible for owners to keep the property empty.
So, what do you need to know about empty business rates, and how can you navigate this potential financial burden?
Understanding empty business rates
Empty business rates are a tax levied by local authorities in England, Scotland, and Wales on commercial properties that have been empty for a certain period of time. The specific regulations and rates vary depending on the location, but in general, they apply when a property has been empty for three months or more.
The rates are intended to incentivize property owners to bring vacant properties back into use, rather than allowing them to sit empty and unused for extended periods of time. The idea is to discourage property owners from leaving properties vacant simply to speculate on rising property values, and to encourage them to actively market and maintain their properties to attract new tenants.
In most cases, the rates are set at the same rate as the standard business rates that would apply if the property were occupied, although there are some exemptions and reliefs available for certain types of properties and situations. For example, newly built properties are often exempt from empty business rates for a period of time to give owners a chance to find tenants, and properties that are being actively marketed for rent may be eligible for a discount on the rates.
Dealing with empty business rates
If you find yourself facing empty business rates on a commercial property that you own, there are a few strategies you can use to minimize the financial impact:
1. Explore Exemptions and Reliefs: Make sure you are aware of any exemptions or reliefs that may apply to your property. For example, if you are actively marketing the property for rent, you may be eligible for a discount on the rates. Similarly, newly built properties are often exempt from empty business rates for a period of time.
2. Consider Temporary Uses: If finding a long-term tenant for your property is proving difficult, consider temporary uses that can generate some income and help offset the cost of the empty business rates. For example, you could rent out the space for pop-up shops, events, or storage to bring in some revenue while you continue to search for a permanent tenant.
3. Negotiate with the Local Authority: In some cases, it may be possible to negotiate with the local authority to reduce or waive the empty business rates on your property. If you can demonstrate that you are actively trying to bring the property back into use or that the rates are causing you undue financial hardship, the authority may be willing to work with you to find a solution.
4. Seek Professional Advice: Dealing with empty business rates can be complex, so it may be worth seeking advice from a professional, such as a surveyor or tax advisor, to help you navigate the regulations and explore all of your options for minimizing the financial impact.
Empty business rates can be a significant financial burden for businesses that find themselves with empty commercial properties, but by understanding the regulations and exploring all of your options for minimizing the impact, you can navigate this challenge and work towards bringing your property back into productive use.