Void business rates, also known as empty property rates, can be a significant concern for property owners and investors. When a commercial property is unoccupied, the owner is still required to pay business rates to the local council. These rates can be a significant financial burden, especially for properties that remain empty for an extended period of time.
The concept of void business rates can be confusing for those who are not familiar with the commercial property market. In this article, we will explore what void business rates are, why they exist, and how property owners can minimize the impact of these rates.
What are void business rates?
Void business rates are a form of tax that property owners must pay on unoccupied commercial properties. These rates are charged by local councils and are calculated based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA) and is used to calculate the amount of business rates that a property owner must pay.
The purpose of void business rates is to discourage property owners from keeping commercial properties empty for extended periods of time. By imposing a tax on unoccupied properties, local councils aim to incentivize property owners to either rent out or sell their properties, thus bringing them back into productive use.
Why Do void business rates Exist?
Void business rates were introduced as a way to prevent property owners from leaving commercial properties empty as a tax avoidance measure. In the past, some property owners would deliberately keep their properties unoccupied to avoid paying business rates. This practice not only deprived local councils of much-needed revenue but also had a negative impact on the local economy.
By imposing void business rates, local councils hope to encourage property owners to actively market their properties and bring them back into productive use. This, in turn, helps to stimulate economic growth, create jobs, and revitalize local communities.
How Can Property Owners Minimize void business rates?
For property owners, void business rates can pose a significant financial burden, especially if a property remains empty for an extended period of time. However, there are several strategies that property owners can employ to minimize the impact of void business rates:
1. Seek Exemptions and Relief: In some cases, property owners may be eligible for exemptions or relief from void business rates. For example, properties that are undergoing major refurbishment or are on the market for sale or to let may be eligible for a temporary exemption from business rates. Property owners should check with their local council to see if they qualify for any exemptions or relief.
2. Reduce the Rateable Value: Property owners can also try to reduce the rateable value of their properties to lower their business rates liability. This can be done by appealing the rateable value with the VOA or by making changes to the property that may impact its value, such as removing fixtures or fittings.
3. Consider Short-term Leases or Pop-up Tenants: Property owners can also consider entering into short-term leases or agreements with pop-up tenants to generate income from their unoccupied properties. While these arrangements may not be a long-term solution, they can help to alleviate the financial burden of void business rates while the property is vacant.
4. Explore Alternative Uses: Property owners can explore alternative uses for their unoccupied properties to generate income and reduce the impact of void business rates. For example, a vacant office building could be converted into residential apartments or a retail space could be used for temporary events or exhibitions.
5. Seek Professional Advice: Property owners who are struggling to manage the financial impact of void business rates should seek professional advice from a chartered surveyor or property consultant. These experts can help property owners navigate the complexities of void business rates and develop strategies to minimize their impact.
In conclusion, void business rates can be a significant concern for property owners, especially during periods of economic uncertainty. However, by understanding what void business rates are, why they exist, and how to minimize their impact, property owners can effectively manage this financial burden and bring their unoccupied properties back into productive use.