When it comes to owning a commercial property, there are various costs and expenses that landlords need to consider. One such expense is the rates payable on empty commercial property. This can often be a significant financial burden for property owners, especially if the property remains vacant for an extended period of time. In this article, we will delve into the intricacies of rates payable on empty commercial property and provide some insights into how landlords can navigate this aspect of property ownership.
Rates payable on commercial properties are essentially taxes that are charged by local authorities to fund local services such as waste collection, policing, and road maintenance. These rates are calculated based on the rateable value of the property, which is an assessment of the property’s rental value as determined by the Valuation Office Agency (VOA). The rateable value is then used to determine the rates payable by the property owner.
In the case of empty commercial properties, the rates payable can present a unique challenge for landlords. In many cases, property owners are still required to pay rates on empty commercial property, even if the property is not generating any rental income. This is due to a piece of legislation known as Section 45 of the Local Government Finance Act 1988, which allows local authorities to charge rates on unoccupied commercial properties.
The rationale behind this legislation is to discourage property owners from leaving properties empty for long periods of time, as empty properties can have a negative impact on the surrounding area and contribute to urban blight. By charging rates on empty commercial properties, local authorities aim to incentivize property owners to actively market and occupy their properties, rather than letting them sit vacant.
That being said, there are some exemptions and relief schemes available to property owners who find themselves in a situation where they are liable for rates on empty commercial property. For example, properties that are undergoing major structural repairs or renovations may qualify for an exemption from rates. Additionally, properties that are deemed to be temporarily incapable of occupation due to factors beyond the owner’s control, such as flood damage or severe weather conditions, may also qualify for relief from rates.
Furthermore, there are certain types of properties that are exempt from paying rates on empty commercial property altogether. These include properties that are used for certain types of agricultural or industrial purposes, as well as properties that are listed buildings or have been designated as being of historical or cultural significance. It is worth noting that exemptions and relief schemes vary from one local authority to another, so property owners should consult with their local council to determine what options are available to them.
For property owners who are struggling to pay rates on empty commercial property, there are a few strategies that can be employed to mitigate the financial burden. One option is to explore the possibility of negotiating a rates concession with the local authority. In some cases, local councils may be willing to offer reduced rates or payment plans for property owners who are experiencing financial hardship.
Another option is to consider leasing the property on a short-term basis to a temporary tenant, such as a pop-up shop or an events company. By generating some rental income from the property, landlords may be able to offset the cost of rates payable on empty commercial property. Additionally, leasing the property on a short-term basis can help to attract potential long-term tenants by showcasing the property’s potential and attracting foot traffic to the area.
In conclusion, rates payable on empty commercial property can be a significant financial burden for property owners. However, by understanding the legislation governing rates on empty properties and exploring the exemptions and relief schemes available, landlords can take steps to minimize the impact of rates on their bottom line. By being proactive and creative in their approach to managing empty commercial properties, landlords can navigate this aspect of property ownership successfully.