When it comes to owning property for business purposes, there are many costs associated with maintaining the property and ensuring it complies with all regulations One of the most significant expenses for property owners is business rates, which are taxes that businesses must pay to local authorities.
Business rates are calculated based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA) in England, the Scottish Assessors in Scotland, and the Valuation and Lands Agency in Northern Ireland The rateable value is an estimate of the open market rental value of a property at a specific date, which is used to calculate the business rates payable.
For vacant properties, however, business rates can present a unique set of challenges When a property is vacant, it is not generating any income for the owner, yet they are still required to pay business rates on the property This can be a significant financial burden for property owners, especially if the property remains vacant for an extended period.
In the past, many property owners would leave properties vacant to avoid paying business rates However, the government has implemented measures to discourage this practice, including the introduction of Empty Property Rates (EPR) EPR is an additional tax on vacant commercial properties, which is intended to incentivize property owners to bring vacant properties back into productive use.
The rate of EPR varies depending on the location and size of the property In England, for example, properties with a rateable value of less than £2,900 are exempt from EPR Properties with a rateable value between £2,900 and £12,000 are charged a reduced rate, while properties with a rateable value of £12,001 or more are subject to the full rate of EPR.
Property owners can also apply for exemptions or relief from EPR in certain circumstances For example, if a property is being refurbished or undergoing structural changes, the property owner may be eligible for a temporary exemption from EPR business rates vacant property. Additionally, charities and community amateur sports clubs are eligible for 80% relief on EPR for properties that are used for charitable purposes.
It is important for property owners to stay informed about changes to business rates and EPR regulations to ensure compliance with the law Failure to pay business rates can result in legal action, including court proceedings and potential seizure of the property by the local authority.
In addition to EPR, property owners should also be aware of other potential costs associated with owning vacant property For example, property insurance premiums may be higher for vacant properties, as they are more susceptible to vandalism, theft, and damage Property owners may also need to invest in security measures, such as alarm systems and CCTV cameras, to protect the property from trespassers.
Property owners should also consider potential opportunities for generating income from vacant properties For example, properties could be leased out for temporary use, such as hosting events or exhibitions, to generate revenue while the property is vacant Property owners could also explore alternative uses for the property, such as converting it into residential units or coworking spaces.
Overall, owning vacant property can present unique challenges for property owners, particularly when it comes to paying business rates By staying informed about business rates regulations and exploring potential opportunities for generating income from vacant properties, property owners can minimize their financial burden and maximize the potential of their properties.
In conclusion, business rates for vacant property can be a significant financial burden for property owners, but there are steps that can be taken to mitigate the costs Understanding the regulations surrounding business rates and exploring alternative uses for vacant properties can help property owners navigate the challenges of owning vacant property and ensure compliance with the law.