Empty property rates, also known as business rates on empty properties, can be a significant financial burden for property owners. In the United Kingdom, these rates are applicable to non-residential properties that have been empty for a certain period of time. In this article, we will discuss what empty property rates are, how they are calculated, and provide some tips on how property owners can minimize these costs.
What are empty property rates?
Empty property rates are a type of tax that is levied on non-residential properties that have been empty for a certain period of time. In most cases, these rates apply to properties that are unoccupied for more than three months. Property owners are required to pay business rates on these empty properties, regardless of whether the property is still being actively marketed for rent or sale.
The rationale behind empty property rates is to discourage property owners from leaving their properties vacant for extended periods of time. By imposing financial penalties on empty properties, the government aims to incentivize property owners to bring their properties back into use, either by letting them out or selling them.
How are empty property rates Calculated?
The calculation of empty property rates is based on the rateable value of the property. The rateable value is an estimate of the annual rental value of the property as determined by the Valuation Office Agency (VOA). The actual amount of empty property rates that a property owner will be required to pay is calculated by multiplying the rateable value of the property by the relevant multiplier, which is set by the government each year.
It is important to note that empty property rates are generally charged at a higher rate than standard business rates. This increased rate is intended to serve as a disincentive for property owners to leave their properties empty for long periods of time. For example, in England, the standard multiplier for business rates in 2021/2022 is 49.9 pence. However, properties that have been empty for more than three months are subject to a 100% increase in the multiplier, effectively doubling the amount of business rates that need to be paid.
How Can Property Owners Minimize empty property rates?
Property owners who are faced with empty property rates may be wondering how they can minimize these costs. While there is no foolproof way to completely avoid empty property rates, there are some strategies that property owners can consider to help reduce the financial impact of these rates.
One option for property owners is to consider applying for an exemption or relief from empty property rates. In certain circumstances, property owners may be eligible for exemptions or discounts on their empty property rates. For example, properties that are under extensive refurbishment or redevelopment may qualify for relief from empty property rates for a limited period of time. Property owners should check with their local council to see if they are eligible for any exemptions or relief programs.
Another way for property owners to reduce empty property rates is to actively market their properties for rent or sale. By demonstrating that they are actively seeking to bring their properties back into use, property owners may be able to mitigate the financial impact of empty property rates. In some cases, properties that are actively marketed may be granted a temporary exemption from empty property rates.
Property owners should also consider the option of letting out their empty properties on a short-term basis. By renting out the property for temporary uses such as pop-up shops, temporary offices, or even storage space, property owners can generate income from their empty properties and potentially offset some of the costs of empty property rates.
In conclusion, empty property rates can be a significant financial burden for property owners. By understanding what empty property rates are, how they are calculated, and exploring strategies to minimize these costs, property owners can take proactive steps to mitigate the financial impact of empty property rates. Whether through seeking exemptions, actively marketing properties, or exploring short-term rentals, property owners have options available to help reduce the financial burden of empty property rates.