When it comes to owning commercial property, there are many factors that need to be considered in order to maximize its value and profitability. One such factor is the rates payable on empty commercial property. These rates, also known as business rates, can have a significant impact on the overall financial health of a property owner. In this article, we will explore what rates payable on empty commercial property are, how they are calculated, and some strategies for minimizing their impact.
The rates payable on empty commercial property are a type of tax that is levied by local authorities in the UK. These rates are based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The rateable value is an estimate of the annual rental value of the property if it were to be rented on the open market. This value is then used to calculate the amount of rates that must be paid by the property owner.
The rates payable on empty commercial property can be a significant expense for property owners, especially if the property remains vacant for an extended period of time. In some cases, the rates payable on an empty property can be even higher than the rates payable on a property that is occupied and generating income. This can create a financial burden for property owners and make it more challenging to find tenants for their vacant properties.
There are several ways in which the rates payable on empty commercial property are calculated. The most common method is through the multiplier system, which is used to calculate the total amount of rates that must be paid. The multiplier is set by the government each year and is applied to the rateable value of the property to determine the final amount of rates payable.
In addition to the multiplier system, there are also certain relief schemes that property owners may be eligible for in order to reduce the amount of rates payable on empty commercial property. One such relief scheme is the Small Business Rate Relief, which provides a discount on rates for properties with a rateable value below a certain threshold. Additionally, there is also a relief scheme specifically for empty properties, which can provide a temporary exemption from rates for a period of time.
Despite these relief schemes, many property owners still struggle with the financial burden of rates payable on empty commercial property. In order to minimize this impact, there are several strategies that property owners can employ to reduce their rates liability. One such strategy is to actively market the property and try to find tenants as quickly as possible. By securing a tenant for the property, the rates payable on the property will be transferred to the new tenant, reducing the financial burden on the property owner.
Another strategy for minimizing rates payable on empty commercial property is to consider appealing the rateable value of the property. If a property owner believes that the rateable value of their property is too high, they can submit an appeal to the VOA in order to have the value reassessed. If successful, this can result in a lower rateable value and a reduction in the amount of rates payable.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners. By understanding how these rates are calculated, exploring relief schemes, and employing strategies to reduce rates liability, property owners can minimize the impact of rates on their bottom line. Ultimately, it is important for property owners to be proactive in managing their rates liability in order to maximize the value and profitability of their commercial properties.