When it comes to running a business, there are numerous expenses that business owners have to account for. One of the costs that is often overlooked or misunderstood is unoccupied business rates, also known as vacant property business rates. These rates are charged on commercial properties that are empty, and they can have a significant financial impact on businesses that own or lease such properties.
unoccupied business rates are charged by local authorities in the UK under the Non-Domestic Rating (Unoccupied Property) (England) Regulations 2008. The purpose of these rates is to encourage property owners to keep their premises occupied and in use, rather than letting them remain vacant for extended periods of time. By imposing a financial penalty on unoccupied properties, the government aims to prevent property owners from leaving buildings empty and potentially affecting the local economy.
The amount of unoccupied business rates that a property owner has to pay depends on various factors, including the rateable value of the property and the duration of the vacancy. In England, from the 1st April 2020, most commercial properties are subject to 100% business rates liability if they have been empty for three months or more. This can be a significant financial burden for business owners, especially if they are already struggling with other expenses.
It is important for business owners to be aware of the regulations surrounding unoccupied business rates and to take steps to minimize their liability. One way to do this is to actively market the property for rent or sale, as properties that are actively being marketed are eligible for a 3 or 6 months exemption from unoccupied rates, depending on the property type. Another option is to consider short-term leases or licenses for the property, which can help to generate income and reduce the amount of time that the property is unoccupied.
Property owners can also apply for exemptions or relief from unoccupied business rates in certain circumstances. For example, properties that are undergoing major renovation or structural repairs may be eligible for a 100% relief from business rates for a specified period of time. Additionally, properties that are owned by charities or community amateur sports clubs may be eligible for an 80% relief from unoccupied rates. It is important for property owners to carefully review the eligibility criteria for these exemptions and relief options and to apply for them if they qualify.
In some cases, property owners may be able to reduce their liability for unoccupied business rates by negotiating with the local authority. For example, if a property owner can demonstrate that they are actively seeking a tenant for the property and that they are making efforts to bring the property back into use, they may be able to negotiate a reduced rate or a temporary waiver of the unoccupied rates. It is important for property owners to keep detailed records of their efforts to market the property and to communicate regularly with the local authority to discuss their options.
Unfortunately, there are also instances where property owners may be unable to avoid paying unoccupied business rates. For example, if a property is unable to be used due to legal restrictions or planning regulations, the owner may still be liable for the full amount of unoccupied rates. In these cases, property owners may need to seek legal advice to explore their options and to understand their obligations under the law.
Overall, unoccupied business rates can be a significant financial burden for property owners, especially in challenging economic times. It is important for business owners to understand the regulations surrounding unoccupied rates and to take proactive steps to minimize their liability. By actively marketing the property, applying for exemptions and relief, and negotiating with the local authority, property owners can reduce their financial exposure and protect their bottom line.