When it comes to owning commercial property, one of the essential aspects that landlords need to consider is the rates payable on empty commercial property. These rates can often be a source of confusion and concern for property owners, as they can significantly impact the overall financial health of the investment. In this article, we will delve into the details of rates payable on empty commercial property, how they are calculated, and what landlords can do to minimize the financial burden.
First and foremost, it is essential to understand what rates payable on empty commercial property are. These rates, also known as business rates or non-domestic rates, are taxes levied by local authorities on non-residential properties. They are a significant source of revenue for local councils and are used to fund essential services such as schools, roads, and public libraries. The rates payable are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA).
One of the key issues that landlords face when it comes to rates payable on empty commercial property is the fact that they are still required to pay these rates even if the property is vacant. This can be a significant financial burden, especially for landlords who are struggling to find tenants for their commercial properties. In some cases, landlords may find themselves paying rates that are higher than the rental income they would receive if the property were occupied.
So, how are rates payable on empty commercial property calculated? The rates payable are based on the rateable value of the property, which is assessed by the VOA every five years. The rateable value is the estimated rental value of the property on a certain date, and it is used to calculate the rates payable for the property. The actual rates payable are calculated by applying the national multiplier, also known as the uniform business rate (UBR), to the rateable value of the property.
One of the ways in which landlords can reduce the financial burden of rates payable on empty commercial property is by taking advantage of certain reliefs and exemptions that are available. For example, properties with a rateable value of less than £12,000 are eligible for small business rate relief, which can significantly reduce the rates payable. Additionally, properties that are unoccupied for a certain period may be eligible for empty property relief, which can provide a discount on the rates payable for a specified period.
Another option for landlords looking to minimize the financial impact of rates payable on empty commercial property is to consider appealing the rateable value of the property. If landlords believe that the rateable value assessed by the VOA is inaccurate, they can appeal the valuation and request a reassessment. This can potentially result in a lower rateable value and, consequently, lower rates payable for the property.
It is also worth noting that some local authorities offer discretionary relief for empty commercial properties, especially in areas where there is a high vacancy rate. Landlords should inquire with their local council to see if they are eligible for any additional relief or exemptions that can help reduce the financial burden of rates payable on their empty commercial property.
In conclusion, rates payable on empty commercial property can be a significant financial burden for landlords, especially in cases where the property remains vacant for an extended period. However, by understanding how these rates are calculated, exploring available reliefs and exemptions, and potentially appealing the rateable value of the property, landlords can take steps to minimize the financial impact and make owning commercial property a more profitable venture.