Vacant properties have long been a concern for property owners and local governments alike. Not only do empty buildings detract from the overall appeal of a neighborhood, but they also pose unique challenges when it comes to business rates. In this article, we will explore the impact of business rates on vacant property and discuss the ways in which property owners can navigate these fees.
Business rates are a tax on non-domestic properties, including shops, offices, warehouses, and factories. These rates are calculated based on the rateable value of a property, which is set by the government’s Valuation Office Agency (VOA). The rateable value is a reflection of the property’s rental value as of a specific date, known as the “antecedent valuation date.”
For vacant properties, determining the rateable value can be complex. In some cases, the rateable value may be set as if the property were still in use, leading to high business rates for property owners. This can be a significant financial burden, especially for property owners who are struggling to find tenants or who are in the process of renovating a property.
There are, however, some exceptions to business rates on vacant property. Properties that are empty for a short period of time, typically three months or less, are exempt from business rates. This grace period allows property owners some leeway in finding new tenants or completing renovations without incurring additional costs.
Additionally, certain types of properties may be eligible for extended empty property relief. For example, newly built properties are granted a 100% exemption from business rates for the first three months after completion. This can provide property owners with some financial breathing room as they look to attract tenants to their newly constructed spaces.
Despite these exemptions and reliefs, many property owners still find themselves facing high business rates on vacant property. So, what can be done to navigate this challenge? One option is to explore the possibility of appealing the rateable value of the property.
Property owners can submit an appeal to the VOA if they believe that the rateable value of their property is inaccurate. This process involves providing evidence to support a lower rateable value, such as rental evidence of similar properties in the area or details of any physical changes to the property that may impact its value.
While appealing the rateable value can be time-consuming and complex, it can be a worthwhile endeavor for property owners facing high business rates on vacant property. A successful appeal can result in a lower rateable value and reduced business rates, providing much-needed financial relief for property owners.
Another option for property owners dealing with high business rates on vacant property is to explore alternative uses for the space. In some cases, converting a vacant property into a different type of commercial use can result in lower business rates. For example, converting a vacant office building into a mixed-use property with retail space may qualify for a lower rateable value, leading to reduced business rates.
Property owners can also consider temporary uses for vacant properties, such as pop-up shops, art galleries, or event spaces. These temporary uses can generate income while the property is vacant, helping to offset the cost of business rates. Additionally, demonstrating that the property is actively being used can support an appeal for a lower rateable value.
In conclusion, business rates on vacant property can be a significant financial burden for property owners. However, there are strategies that can be employed to navigate this challenge, from appealing the rateable value of the property to exploring alternative uses for the space. By taking proactive steps to address high business rates, property owners can minimize costs and maximize the potential of their vacant properties.