void business rates refer to the charges that commercial property owners have to pay when their property is unoccupied. These rates are a significant concern for landlords and business owners alike, as they add an extra financial burden during times when the property is not generating any income. In this article, we will delve into what void business rates are, how they are calculated, and what steps can be taken to minimize their impact.
Business rates are taxes imposed by the government on commercial properties, similar to how council tax is levied on residential properties. These rates are based on the rental value of the property and are used to fund local services such as schools, roads, and waste collection. However, when a property is vacant, business rates still need to be paid, albeit at a reduced rate known as void business rates.
The government introduced void business rates as a way to discourage property owners from leaving their properties empty for extended periods. The idea is that by imposing a financial penalty on vacant properties, owners will be incentivized to actively market their properties to prospective tenants or buyers. However, this policy has been met with criticism from landlords who argue that void business rates unfairly penalize them, particularly during economic downturns or property market downturns when finding tenants becomes more challenging.
Calculating void business rates can be a complex process, as it involves determining the rateable value of the property and applying the appropriate multiplier set by the local council. The rateable value is based on the rental value of the property as determined by the Valuation Office Agency (VOA), while the multiplier is set by the government each year. Property owners can use online tools provided by the VOA and local councils to estimate their void business rates, but it is recommended to seek professional advice to ensure accuracy.
There are several ways in which property owners can reduce the impact of void business rates on their finances. One common strategy is to apply for empty property relief, which provides a 100% exemption from business rates for the first three months that a property is vacant. After the initial three-month period, the exemption may be extended for a further three months for certain types of properties, such as industrial buildings or listed buildings. Property owners should check with their local council to see if they are eligible for empty property relief and how to apply.
Another approach to minimizing void business rates is to consider leasing the property on a short-term basis to temporary tenants. By doing so, property owners can generate some income from the property while also avoiding full void business rates. Short-term leases can be particularly beneficial for seasonal businesses or pop-up shops looking for temporary space. However, property owners should be aware of the potential risks and legal implications of entering into short-term leases, and it is advisable to seek legal advice before doing so.
Property owners can also explore other options such as negotiating with local councils for a reduction in void business rates or seeking alternative uses for the property that may qualify for a business rates exemption. For example, converting a vacant office building into residential apartments may attract a lower rateable value and reduce void business rates. Property owners should be proactive in exploring all available options to mitigate the financial impact of void business rates.
In conclusion, void business rates are an unavoidable cost for commercial property owners when their properties are unoccupied. While these rates can pose a challenge, there are ways to minimize their impact through strategies such as applying for empty property relief, leasing the property on a short-term basis, and seeking alternative uses for the property. By being proactive and seeking professional advice, property owners can navigate the complexities of void business rates and effectively manage their finances.