When it comes to owning commercial property, many business owners are not aware of the potential costs associated with unoccupied premises. One of the most important things to understand is the business rates that apply to properties that are not currently being used or occupied. These rates can be a significant financial burden for owners and can have a major impact on their bottom line.
Business rates are a tax that is levied on most non-domestic properties, including commercial and industrial buildings. The rates are calculated based on the rateable value of the property, which is set by the Valuation Office Agency (VOA). The rateable value is an estimate of how much rent the property could fetch on the open market at a specific date.
For occupied premises, business rates are typically paid by the tenant or occupier of the property. However, when a property is unoccupied, the responsibility for paying the rates falls to the owner of the property. This can come as a surprise to many property owners who may not have factored these costs into their budgets.
The rate of business rates on unoccupied premises can vary depending on the local authority and the specific circumstances of the property. In England, the rules surrounding business rates on unoccupied properties changed in 2008 with the introduction of the Empty Property Rate. This legislation meant that most properties that had been empty for three months or more would be subject to full business rates, rather than the previous 50% discount.
There are some exemptions to the Empty Property Rate, such as properties owned by charities or community amateur sports clubs. Additionally, industrial properties are exempt from the Empty Property Rate for the first six months. It’s important for property owners to familiarize themselves with the rules and regulations in their area to ensure they are not caught off guard by unexpected costs.
The Empty Property Rate can be a significant financial burden for property owners, especially if they are already struggling to find tenants for their premises. In some cases, the cost of business rates on unoccupied premises can be a major factor in the decision to sell or lease a property.
One option for property owners looking to mitigate the cost of business rates on unoccupied premises is to explore the possibility of temporary occupation. This can involve allowing a temporary tenant to occupy the property for a short period of time, which can exempt the property from the Empty Property Rate for that period.
Another option is to apply for an exemption or relief from the local authority. In some cases, property owners may be able to appeal the rateable value of their property or apply for a specific type of relief that can reduce the amount of business rates they are required to pay.
It’s important for property owners to stay informed and proactive when it comes to managing business rates on unoccupied premises. Failure to pay the rates can result in fines and penalties, so it’s crucial to understand the rules and regulations in place and take the necessary steps to comply.
In conclusion, business rates on unoccupied premises can be a significant financial burden for property owners. Understanding the rules and regulations surrounding these rates is essential for managing costs and avoiding penalties. By exploring options for relief and staying informed, property owners can better navigate the complex world of business rates and protect their bottom line.