Void business rates, also known as empty property rates, can often be a confusing topic for business owners and property investors. Understanding how these rates work and how they can impact your bottom line is crucial for navigating the world of commercial property. In this article, we will break down what void business rates are, how they are calculated, and what you can do to minimize their impact on your business.
What are void business rates?
In the world of commercial property, void business rates refer to the rates that are charged on a property that is empty or unoccupied. These rates are a form of tax that the owner of the property must pay to the local council, even if the property is not generating any income. The rationale behind void business rates is to discourage property owners from leaving properties empty for extended periods of time, as empty properties can have a negative impact on the surrounding area and local economy.
How are void business rates Calculated?
Void business rates are calculated based on the rateable value of the property and the current multiplier set by the government. The rateable value is an estimate of the annual rental value of the property as determined by the Valuation Office Agency. The multiplier is set by the government each year and is used to calculate the actual amount of business rates that must be paid.
For properties that have been empty for less than three months, the owner is usually entitled to a 100% exemption from void business rates. However, once the property has been empty for more than three months, the owner will typically be required to pay the full amount of business rates. In some cases, the local council may grant a further exemption for properties that have been empty for a longer period of time, but this is not guaranteed.
Minimizing the Impact of void business rates
There are several strategies that property owners can use to minimize the impact of void business rates on their bottom line. One option is to actively market the property for sale or rent in order to minimize the amount of time that it remains empty. By finding a new tenant or buyer quickly, property owners can avoid having to pay void business rates for an extended period of time.
Another option is to explore the possibility of applying for an exemption or relief from void business rates. Some property owners may be eligible for certain exemptions or reliefs, such as those available to charitable organizations or properties undergoing renovation. By researching the criteria for these exemptions and reliefs, property owners may be able to significantly reduce their void business rates liability.
Finally, property owners can also consider investing in their empty properties in order to make them more attractive to potential tenants or buyers. This could involve making improvements to the property, such as refurbishing the interior or updating the facilities. By investing in the property, owners can increase the likelihood of finding a new occupant quickly, thereby reducing the amount of time that they are required to pay void business rates.
In conclusion, void business rates can be a significant financial burden for property owners, especially those with multiple empty properties in their portfolio. However, by understanding how void business rates are calculated and exploring strategies to minimize their impact, property owners can effectively manage this aspect of their business. Whether it be actively marketing the property, applying for exemptions or reliefs, or investing in improvements, there are options available to help alleviate the financial strain of void business rates.