Empty commercial properties can be a headache for property owners and landlords. Not only are they a financial burden due to the lack of rental income, but they also come with additional costs such as maintenance and security. To make matters worse, many property owners are also required to pay business rates on their empty commercial properties. In this article, we will explore the impact of rates on empty commercial property and discuss some strategies for managing this financial burden.
Business rates are a tax that is charged on most non-domestic properties, including shops, offices, warehouses, and factories. The rates are calculated based on the rental value of the property and are usually paid by the occupier or tenant. However, if a property is empty, the owner is responsible for paying the rates.
One of the biggest challenges of owning an empty commercial property is the financial strain of paying business rates without the benefit of rental income. This can be especially burdensome for property owners who are struggling to find tenants or who are in the process of refurbishing or redeveloping their properties. In some cases, the rates on an empty property can even exceed the rental value once it is occupied, making it difficult for property owners to attract new tenants.
The government has acknowledged the challenges faced by property owners with empty commercial properties and has introduced some measures to offer relief. For example, owners of empty commercial properties are eligible for a one-off relief on their business rates for three months after the property becomes vacant. This can provide some temporary financial relief for property owners who are struggling to find tenants.
In addition to the one-off relief, some local authorities offer discretionary rates relief for empty commercial properties. This can be a valuable option for property owners who are facing financial difficulties due to high rates on their empty properties. By applying for discretionary relief, property owners may be able to reduce or even eliminate their rates liability for a certain period of time.
Despite these relief measures, rates on empty commercial properties continue to be a significant financial burden for many property owners. In some cases, the rates can make it financially unviable to keep the property empty, forcing owners to lower their rental expectations or sell the property at a loss. This can have a negative impact on the local economy, as empty commercial properties can deter potential investors and tenants from moving into the area.
So, what can property owners do to manage the financial burden of rates on empty commercial properties? One option is to explore alternative uses for the property that may be exempt from business rates. For example, some properties may qualify for charitable relief if they are used for charitable purposes. Property owners can also consider leasing the property for temporary uses such as pop-up shops or events, which may be exempt from business rates.
Another option is to negotiate with the local authority for a rates reduction based on the condition of the property or the economic climate. Property owners can provide evidence of factors such as structural issues, poor market conditions, or the impact of external factors such as roadworks or construction that are affecting the property’s rental value. By presenting a strong case, property owners may be able to secure a rates reduction or deferment until the property is reoccupied.
In conclusion, rates on empty commercial properties can be a major financial burden for property owners. However, there are options available for managing this burden and providing some relief. Property owners should explore all available relief measures, consider alternative uses for the property, and negotiate with the local authority to reduce or defer their rates liability. By taking proactive steps to manage rates on empty commercial properties, property owners can minimize the financial strain and maximize the potential of their properties.