When it comes to owning property, especially commercial properties, there are many factors that need to be considered. One aspect that often gets overlooked is the issue of business rates on vacant property. In the United Kingdom, all commercial properties are subject to business rates, even if they are empty. This can come as a surprise to many property owners, who may not be aware of the implications of leaving their property vacant.
Business rates are a tax that is levied by local authorities on non-domestic properties such as shops, offices, warehouses, and factories. The rates are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA). The purpose of business rates is to help fund local services and infrastructure, such as schools, roads, and emergency services.
In recent years, there has been a growing concern among property owners about the impact of business rates on vacant property. Many owners find themselves in a difficult situation where they are unable to find tenants for their property, yet they are still required to pay substantial rates. This can put a financial strain on businesses, especially small businesses or property owners who are struggling to make ends meet.
One of the main issues with business rates on vacant property is that they can act as a disincentive for property owners to bring their properties back into use. The high cost of rates on empty property can deter owners from investing in renovations or improvements to make the property more attractive to potential tenants. Instead, they may choose to leave the property vacant in the hope that they will find a tenant in the future. This can result in empty and neglected properties blighting the local area, which can have a negative impact on the wider community.
There are some exemptions and reliefs available for business rates on vacant property, but these are limited in scope and may not be applicable to all properties. For example, properties that are undergoing major renovations or structural changes may be eligible for a temporary exemption from rates. However, once the work is completed, the property will be liable for rates again. Likewise, properties that are newly built or have been empty for less than 3 months may be entitled to a 100% exemption for a limited period.
In 2020, the UK government introduced a one-year exemption for all retail, leisure, and hospitality properties in England due to the COVID-19 pandemic. This was done in an effort to support businesses that were forced to close their doors during lockdowns. However, this exemption was only temporary and has since been lifted, leaving many property owners once again facing high rates on their empty properties.
In Scotland, there is a different approach to business rates on vacant property. Properties that have been empty for more than 3 months are subject to a 10% surcharge on top of their normal rates. This surcharge increases to 20% for properties that have been empty for more than 6 months. The idea behind this surcharge is to encourage property owners to bring their empty properties back into use as quickly as possible.
Overall, the issue of business rates on vacant property is a complex and contentious one. Property owners are caught between a rock and a hard place – on one hand, they are required to pay rates on their empty properties, and on the other hand, they may not have the resources or incentives to bring those properties back into use. As a result, many properties remain vacant for extended periods, causing a range of problems for both the owners and the wider community.
In conclusion, business rates on vacant property is a thorny issue that requires careful consideration and attention from policymakers. The current system can be a barrier to regeneration and economic growth, especially in areas where vacant properties are prevalent. More flexible and targeted measures are needed to support property owners and encourage them to bring their empty properties back into use. Only then can we begin to unlock the full potential of our commercial properties and create vibrant, thriving communities.