As a property owner, the thought of having an empty property on your hands can be stressful. Not only are you missing out on potential rental income, but you may also be faced with additional financial burdens in the form of business rates on that empty property. In this article, we will delve into the concept of business rates on empty property and discuss their impact on property owners.
Business rates are a type of tax that is levied on non-residential properties in the UK. These rates are set by the government and are used to help fund local services such as schools, roads, and waste collection. The amount of business rates that a property owner has to pay is determined by the rateable value of the property, which is assessed by the Valuation Office Agency (VOA).
When a property is empty, it is still liable for business rates unless it is exempt from them. Exemptions typically apply to properties that are being used for certain purposes, such as a property that is being used for charitable activities. However, most empty properties are not exempt from business rates and owners are required to pay them regardless of whether the property is generating income or not.
The rationale behind charging business rates on empty properties is to discourage property owners from leaving their properties vacant for extended periods of time. By imposing this tax, the government aims to incentivize property owners to bring their properties back into use or to rent them out to avoid having to pay higher rates.
For property owners, the financial burden of paying business rates on an empty property can be significant. In some cases, the amount of business rates owed on an empty property can be almost as much as the rental income that the property would generate if it were occupied. This can make it challenging for property owners to justify keeping a property empty for an extended period of time.
Moreover, the longer a property remains empty, the higher the business rates are likely to be. This is because the rateable value of a property is reassessed every time it becomes vacant, which can result in an increase in the amount of business rates that are due. This can create a vicious cycle where property owners are forced to pay higher and higher rates the longer their property remains empty.
In recent years, there have been calls for reforms to the system of business rates on empty properties. Critics argue that the current system is unfair and penalizes property owners who are unable to find tenants for their properties. Some have suggested that there should be more leniency for property owners who are actively seeking tenants but are unable to find them due to factors beyond their control.
One potential solution that has been proposed is to offer a grace period during which property owners are exempt from paying business rates on a property that has become vacant. This grace period could give property owners the opportunity to find a new tenant without being burdened by additional financial costs. Another suggestion is to reduce the rate at which business rates increase for empty properties, to provide some relief to property owners who are struggling to find tenants.
In conclusion, business rates on empty property can have a significant impact on property owners, both financially and in terms of their ability to keep their properties vacant. The current system of business rates can create challenges for property owners, who may find themselves facing substantial costs for empty properties. It is important for property owners to be aware of the implications of business rates on empty properties and to explore potential solutions to mitigate their financial burden.