Empty property rates, often referred to as the “business rates” on unoccupied commercial properties, can be a significant financial burden for property owners. These rates are imposed by local governments in the United Kingdom and are designed to discourage property owners from letting their properties remain empty for extended periods of time.
The concept of empty property rates can be confusing for those who are not familiar with the system. So, let’s break it down and take a closer look at what empty property rates are, how they are calculated, and what property owners can do to minimize their impact.
What are empty property rates?
Empty property rates, as the name suggests, are taxes that are imposed on commercial properties that are empty or unoccupied for an extended period of time. These rates are separate from the usual business rates that are levied on occupied properties and are designed to incentivize property owners to keep their properties occupied and in use.
In the UK, properties that have been empty for more than three months are subject to empty property rates. These rates can be as high as 100% of the property’s rateable value, making them a significant financial burden for property owners.
How are empty property rates Calculated?
Empty property rates are calculated based on the rateable value of the property in question. The rateable value is an estimate of the property’s open market rental value as of a certain date, and it is used by local governments to determine how much business rates property owners should pay.
For properties that have been empty for more than three months, the rateable value is used to calculate the empty property rates. The rateable value is multiplied by the appropriate multiplier set by the government to determine the amount of empty property rates that must be paid.
It is important to note that the multiplier used to calculate empty property rates is usually higher than the standard multiplier used for occupied properties. This is intended to discourage property owners from keeping their properties empty for extended periods of time.
How Can Property Owners Minimize the Impact of empty property rates?
Property owners who are facing high empty property rates may be wondering if there is anything they can do to minimize the impact of these taxes. While empty property rates are mandatory and must be paid, there are a few strategies that property owners can consider to reduce the financial burden.
One option that property owners have is to apply for an exemption or relief from empty property rates. There are certain circumstances in which property owners may be eligible for relief, such as when the property is undergoing major repairs or renovations. Property owners should check with their local council to see if they qualify for any exemptions or relief programs.
Another option for property owners is to consider leasing out the property on a short-term basis. By finding a temporary tenant for the property, property owners can avoid paying empty property rates and generate rental income at the same time. This can be a win-win situation for property owners who are looking to minimize the impact of empty property rates.
Finally, property owners may also want to consider selling the property if they are unable to find a tenant or if the property is no longer needed. Selling the property can help property owners avoid paying empty property rates altogether and can provide them with a lump sum of cash that they can use for other investments or expenses.
In conclusion, empty property rates can be a significant financial burden for property owners in the UK. Understanding how these rates are calculated and exploring options for minimizing their impact can help property owners navigate this complex system and make informed decisions about their properties. By taking proactive steps to address empty property rates, property owners can better manage their finances and ensure that their properties remain productive and profitable.