Navigating The Impact Of Rates On Empty Commercial Property

As a commercial property owner, one of the inevitable costs you will face is business rates. These rates are taxes that are charged on most non-domestic properties, including shops, offices, pubs, warehouses, and factories. However, what happens when your property sits empty? The impact of rates on empty commercial property can be significant, and it is important for owners to understand how they are calculated and what steps they can take to mitigate their impact.

In the UK, commercial properties that are empty are still liable for business rates. This is known as the empty property rates scheme, and it was introduced to encourage property owners to bring their empty properties back into use. Under the scheme, empty commercial properties are subject to business rates at the full rate for three months, after which the rateable value is increased by 100%. This means that owners of empty commercial properties can end up paying double the amount they would if the property were occupied.

The issue of paying rates on empty commercial property can be a significant financial burden for owners, especially during times of economic uncertainty. In addition to the financial impact, empty property rates can also discourage property owners from investing in redevelopment or refurbishment projects, as they may be worried about incurring additional costs while the property is vacant.

One way to mitigate the impact of rates on empty commercial property is to take advantage of the various exemptions and reliefs that are available. For example, properties that are undergoing renovation or structural repairs may qualify for relief from empty property rates. Similarly, properties that are listed buildings or are in areas of redevelopment may also be eligible for relief. It is important for property owners to familiarize themselves with the different exemptions and reliefs that are available to see if they qualify for any of them.

Another option for property owners is to consider leasing the property on a short-term basis to a temporary tenant. By doing so, owners can potentially avoid paying empty property rates, as the property will no longer be considered vacant. This can be a win-win situation for both parties, as the temporary tenant gets a space to operate their business, while the property owner is able to generate income and avoid hefty rates bills.

In some cases, property owners may also consider appealing the rateable value of their property to have it reassessed. This can be a complex process, and it is recommended that owners seek professional advice to help navigate the appeals process. However, if successful, a reduction in the rateable value can result in lower business rates and provide some relief to owners of empty commercial properties.

Property owners should also be aware of the implications of leaving a property empty for an extended period. In some cases, local authorities may step in and take action against owners of long-term vacant properties, such as imposing additional fees or even compulsory purchase orders. Therefore, it is important for owners to actively manage their empty properties and explore all options available to minimize the financial impact.

In conclusion, rates on empty commercial property can have a significant impact on property owners, both financially and operationally. However, there are options available to mitigate these costs, such as exploring exemptions and reliefs, leasing the property on a short-term basis, and appealing the rateable value. By being proactive and informed, property owners can navigate the challenges of rates on empty commercial property and make strategic decisions to minimize their impact.