When it comes to owning or leasing commercial property, one of the expenses that property owners and tenants need to consider is rates payable on empty commercial property. These rates, also known as empty property rates, can often be a significant cost that can impact the financial health of a business. In this article, we will explore what rates payable on empty commercial property are, how they are calculated, and some tips on how you can minimize these costs.
Empty property rates are a form of tax that is charged on commercial properties that are unoccupied. These rates are separate from regular business rates, which are paid on properties that are currently being used for business purposes. The idea behind empty property rates is to encourage property owners to occupy their properties or put them to use, rather than leaving them empty for extended periods of time.
The rates payable on empty commercial property are set by the local authorities and are based on the rateable value of the property. The rateable value is an estimate of the rental value of a property as of a certain date, and it is used to calculate both business rates and empty property rates. The rateable value of a property is assessed by the Valuation Office Agency in England and Wales, the Scottish Assessors in Scotland, and the Land and Property Services in Northern Ireland.
The rates payable on empty commercial property are calculated as a percentage of the rateable value of the property. In England, the rate is set at 3.2% of the rateable value for properties with a rateable value of £2,900 or more. In Wales, the rate is set at 3.5% of the rateable value for properties with a rateable value of £2,500 or more. In Scotland, the rate is set at 3.2% of the rateable value for properties with a rateable value of £15,000 or more. In Northern Ireland, the rate is set at 3.9% of the rateable value for properties with a rateable value of £1 or more.
It is important to note that there are some exemptions and reliefs available for empty property rates. For example, properties that are undergoing major repair work or structural alterations may be exempt from empty property rates for a certain period of time. Properties that are owned by charities or community amateur sports clubs may also be eligible for relief from empty property rates. It is recommended to check with your local authority to see if you qualify for any exemptions or reliefs.
Minimizing empty property rates can help property owners and tenants save money and avoid unnecessary expenses. One way to reduce empty property rates is to actively market the property for rent or sale. By showing that the property is actively being marketed and that efforts are being made to find a tenant or buyer, property owners may be able to qualify for exemptions or reliefs from empty property rates.
Another way to minimize empty property rates is by considering short-term leases or licenses for the property. By offering flexible lease terms, property owners can attract tenants who are looking for short-term space, such as pop-up shops or temporary offices. This can help generate income for the property and avoid paying full empty property rates.
Property owners can also consider using the property for alternative uses while they search for a long-term tenant. For example, they could rent out the space for events, exhibitions, or storage purposes. By finding temporary uses for the property, property owners can generate income and avoid paying empty property rates.
In conclusion, rates payable on empty commercial property can be a significant cost for property owners and tenants. Understanding how these rates are calculated and exploring ways to minimize them can help save money and ensure the financial health of a business. By actively marketing the property, considering short-term leases, and finding alternative uses for the property, property owners can reduce empty property rates and make the most of their commercial investment.