Void business rates can be a significant concern for commercial property owners, particularly those with vacant properties. These rates, also known as empty property rates, are a type of tax that businesses must pay on properties that are unoccupied. This can add an extra financial burden to property owners who are already facing challenges with vacancies and lost rental income. In this article, we will explore what void business rates are, how they are calculated, and what commercial property owners can do to minimize their impact.
What are void business rates?
Void business rates are a form of local taxation that is levied on commercial properties that are empty. The rates are similar to council tax for residential properties, but they apply to business premises instead. The purpose of void business rates is to discourage property owners from leaving their properties vacant for extended periods of time, as empty properties can have negative impacts on the surrounding area and local economy.
How are void business rates Calculated?
The calculation of void business rates can vary depending on the location and type of property. In England and Wales, most vacant commercial properties are subject to 100% business rates after a specified period of vacancy, which is usually three months. However, there are some exceptions to this rule, such as industrial properties, which can receive a 100% exemption for up to six months.
In Scotland, the rules around void business rates are slightly different. Properties are exempt from rates for the first three months of vacancy, but after that, 90% of the normal rates are due. This percentage decreases by 10% each month, eventually reaching 10% after 12 months of vacancy.
It is important for property owners to be aware of the specific rules and regulations around void business rates in their area, as non-compliance can result in penalties and legal action.
Minimizing the Impact of void business rates
There are several strategies that commercial property owners can employ to reduce the financial impact of void business rates. One option is to actively market the property for rent or sale, as this can help to minimize the amount of time that the property is vacant. Working with a professional real estate agent or property management company can help to attract potential tenants and expedite the leasing process.
Another option is to consider temporarily using the property for alternative purposes, such as short-term events or pop-up shops. In some cases, properties that are being actively marketed for rent or sale may be eligible for a temporary exemption from void business rates, as long as certain conditions are met.
Property owners can also explore the possibility of negotiating with the local council for a reduction or deferment of void business rates. This can be particularly useful in cases where the property has been vacant for an extended period due to unforeseen circumstances or economic challenges.
Conclusion
Void business rates can present a significant financial challenge for commercial property owners, particularly those with properties that are struggling to attract tenants. Understanding how void business rates are calculated and implementing strategies to minimize their impact can help property owners to navigate this aspect of property ownership more effectively. By staying informed about the rules and regulations surrounding void business rates and seeking professional advice when needed, property owners can take proactive steps to manage their financial obligations and optimize the return on their investments.