When it comes to commercial properties, one of the challenges that property owners face is dealing with empty rates. Also known as business rates on vacant properties, empty rates can be a significant financial burden for property owners. In this article, we will delve into the concept of empty rates, why they exist, and what property owners can do to mitigate their impact.
empty rates are essentially a tax that is levied on empty commercial properties. The rationale behind this tax is to incentivize property owners to bring their vacant properties back into use, rather than allowing them to sit empty. This is because empty properties can have a negative impact on the surrounding area, leading to lower property values and increased anti-social behavior.
The calculation of empty rates is based on the rateable value of a property. Rateable value is a valuation of a property by the Valuation Office Agency, which is used as the basis for calculating business rates. When a property becomes empty, the rateable value is adjusted to reflect the fact that the property is no longer generating any income. However, instead of being exempt from business rates altogether, empty properties are subject to a reduced rate known as empty rates.
empty rates are typically charged at a higher rate than standard business rates. In England, for example, empty rates are charged at 3.2 times the normal business rates for the first three months that a property is empty, and 2.4 times the standard rate thereafter. This can add up to a considerable sum for property owners, especially if they have multiple empty properties in their portfolio.
One of the biggest challenges with empty rates is that they can act as a disincentive for property owners to invest in bringing their vacant properties back into use. This is because property owners are effectively being penalized for having empty properties, which can make the cost of refurbishing or redeveloping a property prohibitive. As a result, some property owners may choose to keep their properties empty rather than incurring the additional cost of empty rates.
However, there are ways that property owners can mitigate the impact of empty rates. One option is to explore the various exemptions and reliefs that are available for empty properties. For example, small business rate relief may be available for properties with a rateable value below a certain threshold. Additionally, properties that are undergoing refurbishment or redevelopment may be eligible for a temporary exemption from empty rates.
Property owners can also consider alternative uses for their empty properties in order to generate income and reduce their liability for empty rates. For example, renting out the property for temporary uses such as events or pop-up shops can help to generate income while the property is vacant. Alternatively, property owners may consider converting the property into residential units, which can open up a new revenue stream while also helping to address the housing shortage.
Another option for property owners is to challenge the rateable value of their empty properties in order to reduce their liability for empty rates. This can be a complex process, as it requires a thorough understanding of the valuation methodology used by the Valuation Office Agency. However, with the help of a qualified surveyor or property consultant, property owners may be able to successfully appeal the rateable value of their empty properties and secure a reduction in their empty rates liability.
In conclusion, empty rates can be a significant financial burden for property owners, but there are ways to mitigate their impact. By exploring exemptions and reliefs, considering alternative uses for empty properties, and challenging the rateable value, property owners can take steps to reduce their liability for empty rates. Ultimately, the goal is to incentivize property owners to bring their vacant properties back into use, benefiting not only the property owner but also the surrounding community.
In the face of the challenges posed by empty rates, property owners must be proactive in finding solutions to minimize their impact and maximize the potential of their vacant properties. By doing so, property owners can not only avoid the financial burden of empty rates but also contribute to the revitalization and improvement of their local area.