Empty commercial properties are an all too common sight in the business world. Whether it’s due to a slow economy, shifting market trends or simply bad luck, businesses often find themselves unable to fill their once thriving spaces. However, one of the most pressing issues facing owners of empty commercial properties is the burden of business rates. In this article, we will explore the concept of business rates on empty commercial property, their impact and what owners can do to alleviate this financial burden.
Business rates, also known as non-domestic rates, are taxes levied by local authorities on non-residential properties such as shops, offices, warehouses, and factories. These rates are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA) and reassessed every five years. The business rates are calculated as a percentage of the rateable value and can vary depending on the location and type of property.
When a commercial property becomes empty, owners are still liable to pay business rates on the property unless it falls under certain exemptions. Under current legislation, owners of empty commercial properties are granted a three-month exemption from business rates, after which full rates are applied. This presents a significant financial burden for owners who are already struggling to fill their property and generate income.
The impact of business rates on empty commercial property can be devastating for owners, especially small businesses and independent retailers. With the additional financial strain of paying business rates on a property that is not generating any income, owners may find themselves in a precarious financial situation. This can lead to further difficulties in finding tenants or buyers for the property, exacerbating the cycle of vacancy and financial strain.
Furthermore, the current system of business rates on empty commercial property can discourage investment in underutilized areas and hinder economic growth. Owners may be reluctant to invest in improving or refurbishing their empty properties due to the additional cost of business rates, resulting in neglected and deteriorating buildings that blight the local community. This can have a negative impact on property values in the area and deter potential investors and businesses from moving in.
In response to these concerns, the government has introduced a number of measures to alleviate the burden of business rates on empty commercial property. One of these measures is the Empty Property Relief, which grants owners of empty commercial properties a partial exemption from business rates. This relief can range from 10% to 100% depending on the type of property and the local authority’s policies.
Another measure introduced by the government is the Empty Property Rate Relief, which provides a 100% exemption from business rates for certain types of properties. This relief applies to properties that have been empty for a specified period, usually between three months to one year depending on the local authority. However, owners must apply for this relief and meet certain criteria to qualify.
Despite these measures, many owners of empty commercial properties still struggle to cope with the financial burden of business rates. Some owners resort to demolishing their properties to avoid paying business rates, while others seek alternative uses such as temporary pop-up shops or community spaces to generate income and qualify for relief. However, these solutions are not always feasible or sustainable in the long run.
In conclusion, the issue of business rates on empty commercial property is a complex and challenging one for owners, local authorities and the government. The current system of levying business rates on empty properties can hinder economic growth, deter investment and exacerbate financial strain for owners. While measures such as Empty Property Relief and Empty Property Rate Relief provide some relief, more needs to be done to address the root causes of empty commercial properties and ensure a fair and sustainable system for all stakeholders. Owners of empty commercial properties must be supported and incentivized to bring their properties back into use, contributing to the economic vitality and vibrancy of our communities.