If you own or are considering investing in commercial property, you may be familiar with the concept of business rates These taxes, which are charged on most non-domestic properties, can have a significant impact on the profitability of your investment However, when it comes to unoccupied property, the rules regarding business rates can be a bit different In this article, we will explore the ins and outs of business rates on unoccupied property, and how they may affect you as a property owner or investor.
Business rates, sometimes referred to as non-domestic rates, are a tax imposed by local authorities on most non-residential properties, such as shops, offices, warehouses, and factories The revenue generated from business rates is used to fund local services and infrastructure The amount of business rates payable is generally based on the rateable value of the property, which is assessed by the Valuation Office Agency (VOA) and updated every five years.
When a commercial property becomes unoccupied, either due to relocation, renovation, or simply lack of tenants, the owner is still liable to pay business rates on the property This is because the property is still considered to have value, even if it is not generating any income In some cases, the owner may be eligible for a temporary exemption from paying business rates on an unoccupied property However, this exemption is typically limited in duration, with the exact length varying depending on the location and type of property.
One of the key distinctions to be aware of when it comes to business rates on unoccupied property is the difference between exempt and unoccupied rates Exempt rates may apply to certain types of properties, such as agricultural land and buildings, certain listed buildings, and properties with a rateable value below a certain threshold In these cases, the property owner may not be required to pay business rates at all, even if the property is unoccupied Unoccupied rates, on the other hand, apply to most non-residential properties that are empty and not exempt from business rates.
For properties that are subject to unoccupied rates, the amount payable can vary depending on the length of time the property has been empty business rates unoccupied property. In England, for example, the government has introduced a series of rate relief measures to help alleviate the burden of business rates on unoccupied properties Under these measures, unoccupied commercial properties with a rateable value below £2,900 are exempt from paying business rates for the first three months of vacancy After this initial period, the property owner will be required to pay the full unoccupied rates, which are set at 100% of the normal business rates.
In addition to the relief measures offered by the government, property owners may also be able to apply for discretionary rate relief from their local council This relief is typically granted on a case-by-case basis and is intended to provide additional support to property owners facing financial hardship as a result of paying business rates on unoccupied properties It is important to note that discretionary rate relief is not guaranteed, and property owners should be prepared to provide evidence of their financial circumstances in order to be considered for this relief.
When considering the impact of business rates on unoccupied property, it is also important to think about the wider economic implications Vacant commercial properties can have a negative impact on local communities, leading to blight, reduced footfall, and lower property values By charging business rates on unoccupied properties, local authorities aim to encourage property owners to either bring their properties back into use or sell them to someone who will In this way, business rates can help to stimulate economic growth and revitalise neglected areas.
In conclusion, business rates on unoccupied property can be a complex and sometimes contentious issue for property owners and investors While it is understandable that local authorities need to raise revenue to fund essential services, it is also important to strike a balance that does not unfairly penalize property owners who are struggling to find tenants or carry out necessary repairs By staying informed about the rules and relief measures regarding business rates on unoccupied property, property owners can better navigate this aspect of property ownership and investment.