When it comes to owning and managing commercial property, there are many expenses that landlords have to consider. One of these expenses is the rates payable on empty commercial property. These rates, also known as business rates, are taxes that commercial property owners must pay to the local government. This article will explore what these rates are, how they are calculated, and what landlords can do to minimize their impact.
Business rates are taxes that are charged on most non-domestic properties, including shops, offices, warehouses, and factories. These rates are used to help fund local services such as schools, police, and roads. The amount of rates payable on a property is determined by the rateable value of the property, which is set by the Valuation Office Agency (VOA). The rateable value is based on the market rent that the property could fetch if it were let out on the open market.
One of the challenges that landlords face is when their commercial property becomes empty. In such cases, they are still required to pay business rates on the property unless they are entitled to an exemption or discount. The rules around empty property rates can be complex and vary depending on the location and type of property. In England, for example, most commercial properties are given a three-month exemption from rates when they become empty. After this period, landlords are required to pay the full rate unless the property qualifies for a specific exemption.
The government has introduced various schemes to help landlords reduce the burden of paying business rates on empty commercial property. One of these schemes is the Empty Property Rates Relief (EPRR) scheme, which provides 100% relief from rates for certain types of property that have been empty for a specified period. This relief is available for a limited time and is subject to certain conditions, such as the property being actively marketed for rent or sale.
Another way that landlords can reduce their rates liability on empty commercial property is by applying for Section 44A relief. This relief allows landlords to claim a 50% discount on their rates bill for certain types of empty properties, such as newly built properties or properties undergoing renovation. To qualify for this relief, landlords must provide evidence of their eligibility, such as building contracts or planning permissions.
In some cases, landlords may be able to claim hardship relief if they are experiencing financial difficulties due to the rates payable on their empty commercial property. This relief is granted on a case-by-case basis and is subject to the discretion of the local council. Landlords must provide evidence of their financial hardship, such as accounts or cash flow forecasts, to support their claim.
It is important for landlords to be aware of their obligations when it comes to rates payable on empty commercial property. Failure to pay these rates can result in penalties and legal action by the local council. Landlords should ensure that they understand the rules around empty property rates and take advantage of any relief or exemptions that may be available to them.
In conclusion, rates payable on empty commercial property can be a significant expense for landlords to consider. Understanding the rules and regulations around these rates is important to ensure compliance and minimize costs. By taking advantage of relief schemes and exemptions, landlords can reduce the impact of business rates on their empty commercial property. It is advisable for landlords to seek guidance from a professional advisor to ensure they are fully informed of their obligations and entitlements regarding rates payable on empty commercial property.