Void business rates, also known as empty property rates, are a complex issue that many business owners may not fully understand. Essentially, void business rates are taxes that are charged on commercial properties that are unoccupied for a certain period of time. These rates can have a significant impact on businesses, particularly those that own or lease commercial properties.
In this article, we will explore the ins and outs of void business rates, how they are calculated, and the implications they can have on your bottom line. By gaining a better understanding of void business rates, you can take steps to mitigate their impact and ensure that your business remains financially viable.
How void business rates are Calculated
Void business rates are calculated based on the rateable value of a commercial property. The rateable value is determined by the Valuation Office Agency (VOA) and is used to calculate the amount of business rates that a property is liable for. When a commercial property becomes vacant, it is still liable for business rates unless it falls under certain exemptions or relief schemes.
The first three months that a property is empty are typically exempt from business rates. However, after this initial three-month period, the property owner or leaseholder becomes liable for full business rates on the property. This can pose a significant financial burden, particularly for businesses that are struggling or have multiple vacant properties.
In some cases, property owners may be able to apply for relief or exemptions from void business rates. For example, certain properties may qualify for exemptions if they are undergoing major renovation or are deemed unfit for occupation. However, these exemptions are not automatic and must be applied for through the local council.
Implications of void business rates on Businesses
Void business rates can have a number of negative implications for businesses, particularly small and medium-sized enterprises. For businesses that own or lease commercial properties, void business rates can add an additional financial burden at a time when cash flow may already be tight.
In addition, void business rates can act as a disincentive for property owners to improve or invest in their properties. If a property is vacant and liable for business rates, the owner may be less inclined to carry out renovation or redevelopment work, as this could result in an increased tax liability. This can have a knock-on effect on the local economy, leading to a lack of investment in regeneration projects and improvements to the built environment.
Furthermore, void business rates can deter potential tenants from occupying vacant commercial properties. If a property is liable for business rates, this cost may be passed on to the tenant in the form of higher rents or service charges. This can make the property less attractive to potential occupiers, particularly in areas where demand for commercial space is low.
Mitigating the Impact of void business rates
While void business rates can be a headache for businesses, there are steps that property owners and leaseholders can take to mitigate their impact. One option is to explore relief or exemptions that may be available through the local council. By applying for these schemes, property owners may be able to reduce or eliminate their liability for void business rates.
Another option is to consider temporary uses for vacant commercial properties. By allowing short-term leases or temporary occupation agreements, property owners may be able to generate income from their vacant properties while they remain on the market. This can help to offset the cost of void business rates and ensure that the property remains in use.
Finally, property owners may also want to consider investing in their vacant properties to make them more attractive to potential tenants. By carrying out renovation or refurbishment work, property owners can increase the appeal of their properties and potentially secure new occupants. While this may incur upfront costs, the long-term benefits of a fully occupied property can outweigh the initial outlay.
In conclusion, void business rates are a complex issue that can have a significant impact on businesses that own or lease commercial properties. By understanding how void business rates are calculated, the implications they can have, and how to mitigate their impact, property owners and leaseholders can take steps to ensure that their businesses remain financially viable. By exploring relief schemes, considering temporary uses, and investing in their properties, businesses can navigate the challenges presented by void business rates and ultimately strengthen their bottom line.