When it comes to owning or renting commercial property, one of the considerations that business owners need to take into account is the payment of business rates. These rates are taxes paid on non-residential properties that are used for commercial purposes, and they are based on the rateable value of the property. However, what happens when a commercial property sits unoccupied? In this article, we will explore the implications of business rates on unoccupied property, commonly known as business rates unoccupied property.
Unoccupied commercial properties are those that are empty and not being used for any business purposes. This could be due to various reasons such as renovations, awaiting a new tenant, or simply being on the market for sale or rent. Despite not generating any income, unoccupied properties are still liable for business rates, which can be a significant financial burden for property owners.
Business rates on unoccupied property were introduced as a way to prevent property owners from leaving their properties vacant for extended periods of time. The idea is that by imposing rates on unoccupied properties, owners would be incentivized to either rent out the property or put it to use in some way. However, this can be a double-edged sword for property owners, as they may struggle to attract tenants in a competitive market, especially if the property is outdated or in need of significant renovations.
The rateable value of a property is assessed by the Valuation Office Agency (VOA) in England, the Scottish Assessors in Scotland, and the Land and Property Services in Northern Ireland. This value is used to calculate the amount of business rates that need to be paid each year. For unoccupied properties, the rates payable can be up to 100% of the normal rate for the property, although there are some exceptions and reliefs available in certain circumstances.
One of the reliefs available for unoccupied property is the Small Business Rate Relief (SBRR), which provides a discount on business rates for small businesses with properties that have a rateable value below a certain threshold. However, this relief does not apply to properties that are unoccupied, leaving owners with the full burden of business rates to pay.
Another relief that property owners can apply for is the Empty Property Rate Relief, which provides a 100% discount on business rates for the first three months that a property is unoccupied. After this initial period, the property owner may be eligible for a further 50% discount for the next three months. However, beyond this six-month period, the property owner is required to pay the full business rates on the property.
In some cases, property owners may be able to apply for hardship relief if they can demonstrate that paying the full business rates would cause them financial hardship. This relief is assessed on a case-by-case basis and is granted at the discretion of the local council. Property owners may also be able to apply for discretionary rate relief if their property is being used for a charitable purpose or for community benefit.
Despite these reliefs and exemptions, the burden of business rates on unoccupied property can still pose a significant challenge for property owners. Not only do they have to contend with the costs of maintaining an empty property, but they also have to factor in the additional expense of business rates on top of this.
In recent years, there have been calls for reform of the business rates system to provide more support for property owners, especially in light of the economic challenges posed by the COVID-19 pandemic. Some have suggested that the government should consider extending the period of Empty Property Rate Relief or providing additional financial assistance to property owners struggling to pay their business rates.
In conclusion, the payment of business rates on unoccupied property can be a financial burden for property owners, especially in a challenging economic climate. While there are some reliefs and exemptions available, these may not always be sufficient to alleviate the costs of maintaining an empty property. As the debate over business rates reform continues, it is important for property owners to stay informed about their obligations and explore all available options for relief.