As a business owner, navigating the world of commercial real estate can be a daunting task. From finding the right location for your business to negotiating lease agreements, there are many factors to consider. One often overlooked aspect of commercial property management is void business rates.
Void business rates, also known as empty property rates, refer to the taxes that business owners are required to pay on properties that are not currently being used or occupied. These rates can be a significant financial burden for businesses, especially during times of economic uncertainty or when properties are difficult to rent or sell.
Understanding void business rates is crucial for any business owner who owns or leases commercial property. In this article, we will explore what void business rates are, how they are calculated, and what businesses can do to minimize the impact of these rates on their bottom line.
What Are void business rates?
Void business rates are a form of local taxation that applies to commercial properties that are empty or unoccupied. These rates are intended to incentivize property owners to keep their properties occupied and in use, rather than leaving them vacant for extended periods of time.
In the United Kingdom, void business rates are governed by the Local Government Finance Act 1988. Under this legislation, business owners are required to pay rates on properties that have been empty for more than three months. The rates are typically set at 100% of the property’s rateable value, although there are some exceptions and discounts available for certain types of properties.
How Are void business rates Calculated?
Void business rates are calculated based on the rateable value of the property in question. The rateable value is determined by the Valuation Office Agency (VOA) and represents the estimated rental value of the property on a certain date.
Once the rateable value has been established, business owners are required to pay rates on the property at a rate set by the local authority. For properties that have been empty for more than three months, this rate is typically set at 100% of the rateable value.
For example, if a commercial property has a rateable value of £10,000, the business owner would be required to pay void business rates of £10,000 per year, or approximately £833 per month. These rates can add up quickly, especially for businesses that own multiple properties or have properties that remain empty for extended periods of time.
How Can Businesses Minimize the Impact of void business rates?
Minimizing the impact of void business rates requires careful planning and proactive management of commercial properties. There are several strategies that business owners can employ to reduce their liability for void business rates and mitigate the financial impact of these taxes.
One option is to explore exemptions and discounts that may be available for certain types of properties. For example, properties that are undergoing major refurbishment or redevelopment may qualify for a discount on void business rates. Similarly, listed buildings and properties that are used for charitable purposes may be eligible for exemptions from void business rates.
Business owners can also consider entering into short-term lease agreements or licenses with temporary occupants to avoid incurring void business rates on their properties. By leasing out the property on a temporary basis, business owners can generate income from the property while also avoiding the full liability for void business rates.
Another option is to actively market and promote the property to potential tenants or buyers in order to reduce the time that the property remains empty. By attracting new occupants to the property, business owners can start generating rental income and avoid incurring void business rates.
Conclusion
Void business rates can be a significant financial burden for businesses that own or lease commercial property. Understanding how void business rates are calculated and exploring strategies to minimize their impact is crucial for business owners who want to protect their bottom line.
By taking proactive steps to manage and maintain their commercial properties, business owners can reduce their liability for void business rates and ensure that their properties remain profitable and occupied. From exploring exemptions and discounts to actively marketing the property to potential tenants, there are many ways that businesses can address the challenges of void business rates and protect their financial interests.