Void business rates, also known as empty property rates, can be a significant financial burden for property owners and businesses. When a commercial property becomes vacant, the owner is still required to pay business rates to the local council. This can add up to thousands of pounds in additional costs each year, putting further strain on businesses already struggling to stay afloat.
In this article, we will delve into the world of void business rates, exploring what they are, how they are calculated, and what property owners can do to mitigate the impact of these rates.
What Are void business rates?
Void business rates are taxes levied on commercial properties that are empty or unoccupied. The rates are payable by the owner of the property, regardless of whether the property is generating any income. This means that even if a business moves out of a property, the owner is still liable for paying business rates until a new tenant is found.
The rationale behind void business rates is to encourage property owners to keep their premises occupied and prevent the rise of empty or derelict buildings. By imposing this tax, local councils hope to incentivize landlords to actively market their properties and find tenants quickly.
How Are void business rates Calculated?
The calculation of void business rates can vary depending on the local council and the property in question. Generally, empty properties are exempt from paying business rates for the first three months after becoming vacant. After this initial grace period, the rates are charged at the full standard rate, which is usually based on the rateable value of the property.
The rateable value of a property is determined by the Valuation Office Agency (VOA) and reflects the estimated annual rental value of the property. This value is then multiplied by the business rates multiplier set by the government to calculate the total amount due.
In some cases, property owners may be eligible for temporary rate relief or exemptions for certain types of properties, such as industrial buildings or listed buildings. It is advisable for property owners to check with their local council and the VOA to see if they qualify for any reductions in void business rates.
Mitigating the Impact of void business rates
For property owners facing the burden of void business rates, there are several strategies that can help mitigate the financial impact:
1. Negotiate a Rate Reduction: Property owners can appeal to their local council to request a reduction in void business rates based on the circumstances of the vacancy. For example, if the property is undergoing renovations or repairs, the council may consider granting a temporary rate relief.
2. Seek Temporary Tenants: To avoid paying full void business rates, property owners can explore the option of leasing the property on a short-term basis to temporary tenants. This can help generate some income while the search for a long-term tenant continues.
3. Consider Refurbishment or Repurposing: Investing in the refurbishment or repurposing of a vacant property can make it more attractive to potential tenants and help reduce the time it sits empty. By improving the condition and amenities of the property, owners may be able to attract new tenants more quickly.
4. Keep Marketing the Property: Property owners should continue to actively market their vacant properties to potential tenants through various channels, such as listing on property websites, hiring a commercial real estate agent, or networking within the industry. The more exposure the property receives, the higher the chances of finding a new tenant.
5. Explore Business Rates Relief Schemes: Some local councils offer specific relief schemes for vacant properties, such as the Vacant Building Credit scheme in England. Property owners should inquire with their council about any available initiatives that could help reduce void business rates.
In conclusion, void business rates can pose a significant financial challenge for property owners and businesses alike. By understanding how these rates are calculated and exploring strategies to mitigate their impact, property owners can better navigate the complexities of managing vacant properties. With careful planning and proactive measures, owners can reduce the financial burden of void business rates and work towards finding new tenants to occupy their properties.