When it comes to managing property investments, one of the factors that can affect your bottom line is empty rates. A property is considered to be empty when it is not being used or occupied by tenants. Empty rates can be a significant financial burden for property owners, as they are required to pay business rates on empty properties. In this article, we will dive into what empty rates are, how they are calculated, and how property owners can mitigate their impact.
What are empty rates?
Empty rates, also known as vacants rates, are business rates that property owners must pay on properties that are empty or unoccupied. The rates apply to commercial properties, including shops, offices, warehouses, and factories. The purpose of empty rates is to incentivize property owners to keep their properties occupied and in use, rather than leaving them empty for extended periods.
How are empty rates Calculated?
Empty rates 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 rateable value is typically based on factors such as the size, location, and condition of the property.
Once a property becomes empty, property owners are typically granted a period of exemption from paying empty rates. This is known as the empty property rate relief period. The length of this relief period varies depending on the type of property, but it is typically three or six months for most commercial properties.
After the empty property rate relief period expires, property owners are required to pay the full rate of empty rates. The rate at which empty rates are charged can vary depending on local authority guidelines, but it is usually around 50% of the normal business rates for the property.
Mitigating the Impact of empty rates
Empty rates can be a significant financial burden for property owners, especially if they have multiple empty properties in their portfolio. However, there are ways to mitigate the impact of empty rates and reduce the financial strain on property owners.
One option for property owners is to apply for empty property rate relief. This relief is available to property owners who have properties that are undergoing repairs or renovations, or are otherwise unusable due to circumstances beyond their control. By applying for empty property rate relief, property owners can receive a discount on their empty rates for a predetermined period.
Another option for property owners is to explore alternative uses for their empty properties. For example, property owners can consider renting out their properties on a short-term basis for events or pop-up shops. By generating temporary income from their empty properties, property owners can offset the cost of empty rates and potentially attract long-term tenants.
Property owners can also consider investing in property guardianship schemes. Property guardianship involves allowing individuals or companies to live in empty properties at a reduced rent in exchange for keeping the property secure and well-maintained. By partnering with a property guardianship company, property owners can reduce their empty rates liability and minimize the risk of vandalism or squatting.
In addition, property owners should regularly review their property portfolio and consider selling or redeveloping properties that have been empty for an extended period. By taking proactive steps to address empty properties, property owners can avoid paying unnecessary empty rates and maximize the potential value of their investments.
In conclusion, empty rates can be a significant financial burden for property owners, but there are ways to mitigate their impact. By understanding how empty rates are calculated, exploring relief options, and considering alternative uses for empty properties, property owners can minimize their liability and protect their bottom line. By taking a proactive approach to managing empty properties, property owners can ensure that their investments remain profitable in the long run.