The Impact Of Business Rates On Vacant Property

Business rates are a tax imposed on most non-domestic properties, including offices, shops, and warehouses. These rates are often a significant cost for businesses, but what happens when a property sits vacant? How do business rates impact vacant properties and what can owners do to alleviate these costs?

business rates vacant property Vacant properties are a common sight in many cities and towns, with landlords struggling to find tenants or waiting for renovations to be completed. However, even if a property is empty, owners are still liable to pay business rates on it. This can be a significant financial burden, especially if the property remains unoccupied for an extended period.

The government sets business rates based on the rental value of a property. For vacant properties, the rate is typically set at 50% of the full rate after the property has been empty for three months for most types of property. This rate can increase to the full rate after the property has been empty for six months for industrial properties and 12 months for offices and shops. This means that owners of vacant properties are still required to pay a substantial amount in business rates, even if they are not generating any income from the property.

There are, however, some ways in which owners of vacant properties can reduce their business rate liability. One option is to apply for an exemption if the property meets certain criteria. Properties that are undergoing major structural repairs or are in need of a change of use may be eligible for a temporary exemption from business rates. It is important to note that this exemption is not automatic and owners will need to apply to their local council for a reduction.

Another option for owners of vacant properties is to consider leasing the property on a short-term basis. By doing so, owners may be able to qualify for a temporary rate relief scheme, which offers a discount on business rates for the duration of the lease. This can be a good option for owners who are struggling to find a long-term tenant but want to mitigate the financial impact of business rates on their property.

Owners of vacant properties can also consider demolishing the property to avoid paying business rates altogether. If a property is deemed to be uninhabitable and is due for demolition, owners may be eligible for a derelict exemption from business rates. This exemption can only be granted if the property is in such a state that it cannot reasonably be repaired or occupied.

It is worth noting that owners of vacant properties cannot simply avoid paying business rates by leaving the property empty. The government has introduced penalties for properties that are deliberately left vacant to avoid paying rates. Owners who are found to be deliberately keeping a property vacant may be subject to additional charges and legal action.

In conclusion, business rates can have a significant impact on vacant properties, adding to the financial burden for owners who are already struggling to find tenants or complete renovations. However, there are ways in which owners can alleviate this cost, such as applying for exemptions, leasing the property on a short-term basis, or demolishing the property. It is important for owners of vacant properties to be aware of their obligations regarding business rates and to explore all available options for reducing their liability.

Overall, while business rates on vacant properties can be a challenge, with careful planning and consideration, owners can find ways to mitigate the financial impact and protect their investments.