vacant property business rates, also known as empty property rates or non-domestic rates, are taxes property owners must pay on properties that are empty and unused. These rates are charged by local councils in the UK and are a source of controversy among property owners who argue that they are unfairly penalized for not being able to find tenants or buyers for their properties. In this article, we will take an in-depth look at vacant property business rates, how they are calculated, and what property owners can do to minimize their impact.
vacant property business rates were introduced in the UK in response to the problem of properties being left vacant for long periods of time. The government believed that by imposing a financial penalty on property owners who left their properties empty, they would be incentivized to find tenants or buyers more quickly. However, many property owners argue that the rates are unfair, especially in cases where they are actively seeking tenants but are unable to find any due to market conditions or other factors beyond their control.
The calculation of vacant property business rates is based on the rateable value of the property. The rateable value is an estimate of the property’s open market rental value as of a specific date. The rates are set by the local council and can vary depending on the location and type of property. In England, properties with a rateable value of £2,900 or more are subject to business rates, while in Wales the threshold is £12,000.
Once a property has been vacant for three months or more, the owner becomes liable to pay 100% of the business rates. However, some properties are exempt from vacant property business rates, such as newly built properties that have not yet been occupied, listed buildings, and properties with a rateable value of less than £2,900 in England or £12,000 in Wales.
In cases where a property owner is actively seeking tenants but is unable to find any, they can apply for an exemption from vacant property business rates. However, the criteria for exemption are strict and require the property owner to provide evidence of their efforts to market the property and secure a tenant. This can include providing details of advertising efforts, price reductions, and any other steps taken to attract tenants.
Another way property owners can reduce the impact of vacant property business rates is by applying for a temporary reduction in rates. This can be granted in cases where a property is undergoing refurbishment or structural repairs that make it temporarily uninhabitable. The reduction is only temporary and is subject to regular review by the local council.
Property owners can also explore other options for mitigating the impact of vacant property business rates, such as renting out the property on a short-term basis to generate income or seeking advice from a property management company on how to make the property more attractive to potential tenants.
In conclusion, vacant property business rates can be a significant financial burden for property owners, especially in cases where properties remain empty for extended periods of time. While the intention behind these rates is to incentivize property owners to find tenants or buyers more quickly, many argue that they are unfair and punitive. Property owners facing vacant property business rates should explore all available options for reducing their impact, including applying for exemptions or temporary reductions and seeking advice from professional property managers. Ultimately, finding a tenant or buyer for a vacant property is the most effective way to avoid paying these rates in the long term.