Business rates are a form of tax that is charged on most non-domestic properties in the UK The amount of business rates payable is determined by the rateable value of the property, which is assessed by the Valuation Office Agency (VOA) However, what happens when a property is vacant and not generating any income for its owner? In this article, we will explore the specific issues related to business rates on vacant property and the impact it can have on property owners.
Business rates on vacant property, also known as empty property rates, are a contentious issue for many property owners Once a property becomes vacant, the responsibility for paying business rates falls on the owner rather than the occupier This can be a significant financial burden, especially for owners of larger properties or properties in prime locations.
In the UK, vacant commercial property is subject to business rates at the full rate for the first three months it remains empty After this initial period, the property owner is eligible for a 50% discount on the business rates payable However, for certain types of properties such as industrial buildings, the full rate may still apply even after the initial three-month period.
The rationale behind charging business rates on vacant property is to encourage property owners to make productive use of their properties By imposing a financial penalty on vacant properties, local authorities hope to discourage property owners from leaving their buildings empty for extended periods of time This is particularly important in areas where there is high demand for commercial space but a limited supply of available properties.
Despite the intentions behind this policy, many property owners feel that they are unfairly penalized for circumstances beyond their control For example, a property owner may struggle to find a new tenant due to economic downturns or changing market conditions In such cases, the burden of paying business rates on vacant property can add to the financial strain and make it even more challenging to attract new tenants.
There are several options available to property owners who are struggling to pay business rates on vacant property One common strategy is to apply for an exemption or relief from the local council business rates vacant property. Certain types of properties, such as listed buildings or properties with a rateable value below a certain threshold, may be eligible for relief from business rates Property owners can also apply for hardship relief if they can demonstrate that paying the full amount of business rates would cause them financial hardship.
Another option for property owners is to explore ways to reduce their liability for business rates on vacant property This could involve taking steps to actively market the property for rent or sale, as local authorities may offer a longer period of empty property relief for properties that are actively being marketed Property owners can also consider applying for temporary rate relief if they are planning to carry out repairs or renovations on the property, as long as these works are likely to lead to it being let out in the future.
In recent years, there have been calls for reform of the business rates system in the UK to address the issue of vacant property Some industry groups have argued that the current system is outdated and unfair, particularly in light of the challenges faced by property owners in the wake of the COVID-19 pandemic There have been proposals to introduce more flexibility in the business rates system, including the introduction of a new relief scheme for vacant property or a reduction in the overall burden of business rates for all property owners.
In conclusion, business rates on vacant property can be a significant financial burden for property owners, especially in times of economic uncertainty While local authorities have imposed these rates as a way to encourage property owners to make productive use of their properties, many owners feel that they are unfairly penalized for circumstances beyond their control It is important for property owners to explore all available options for reducing their liability for business rates on vacant property and to engage with their local council to seek relief where possible Ultimately, a fair and balanced approach is needed to ensure that vacant properties are brought back into productive use while also supporting property owners during challenging times