Empty rates on commercial property can be a significant financial burden for property owners and investors This article will explore what empty rates are, how they are calculated, and strategies that property owners can use to mitigate the impact of empty rates on their bottom line.
Empty rates, also known as vacant property rates or business rates, are a form of taxation levied on commercial properties that are empty or unoccupied The UK government introduced empty rates in 2008 as a way to encourage property owners to bring vacant properties back into use However, empty rates have been a contentious issue for many property owners, especially during times of economic downturn when property vacancies are high.
Empty rates on commercial properties are calculated based on the rateable value of the property The rateable value is set by the Valuation Office Agency (VOA) and represents the estimated yearly rental value of the property as of 1st April 2015 The empty rates multiplier, which is set by the government, is then applied to the rateable value to determine the amount of empty rates that must be paid.
The empty rates multiplier for the 2021/2022 financial year is 49.9p for small properties and 51.2p for large properties This means that for a property with a rateable value of £100,000, the empty rates payable would be between £49,900 and £51,200 per year These rates can add up quickly for property owners with multiple vacant properties in their portfolio.
Property owners can apply for a temporary exemption from empty rates if they can demonstrate that the property is undergoing repair or structural alterations, or if it is on the market for sale or rent However, these exemptions are only temporary and do not solve the long-term issue of empty rates on commercial properties.
There are several strategies that property owners can use to mitigate the impact of empty rates on their bottom line empty rates commercial property. One common tactic is to explore alternative uses for the property, such as converting it into a different type of commercial space, like a co-working office or a restaurant By putting the property to use in a different way, property owners may be able to reduce or eliminate the empty rates liability.
Another strategy is to negotiate with the local council to revalue the property based on its current market conditions If the property has been vacant for an extended period of time, the rateable value may no longer accurately reflect its rental value By providing evidence of the property’s current condition and market value, property owners may be able to secure a reduced rateable value and lower empty rates liability.
Property owners can also consider entering into a short-term lease agreement with a pop-up tenant or charity to occupy the property temporarily This can help generate income from the property while also reducing the empty rates liability Additionally, property owners may be able to claim relief from empty rates if the property is in an area that is undergoing regeneration or redevelopment.
In conclusion, empty rates on commercial properties can be a significant financial burden for property owners and investors Understanding how empty rates are calculated and exploring strategies to mitigate their impact can help property owners navigate this challenging aspect of property ownership By proactively managing vacant properties and exploring alternative uses, property owners can minimize the impact of empty rates on their bottom line and protect the value of their investment.