When it comes to owning or renting commercial properties, there are many costs that come into play. One such cost that can often catch property owners and tenants by surprise is void business rates. These rates are charged on vacant commercial properties and can have a significant impact on the bottom line. In this article, we will discuss what void business rates are, how they are calculated, and how they can affect both property owners and tenants.
void business rates are taxes that are levied on commercial properties that are empty or unoccupied. These rates are charged by local authorities in England, Scotland, and Wales, and are meant to discourage property owners from leaving their properties vacant for extended periods of time. The idea behind void business rates is to incentivize property owners to either rent out their vacant properties or put them to some other productive use.
The calculation of void business rates is based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA) in England, the Scottish Assessors in Scotland, and the Valuation Office in Wales. Once the rateable value has been determined, it is multiplied by the national multiplier, which is set by the government each year. This gives the rateable value of the property, which is then divided by 12 to get the monthly rate.
For properties that have been vacant for more than three months, the local authority has the discretion to increase the rate by up to 100%. This means that property owners could end up paying double the standard rate if their property remains vacant for an extended period of time. This can be a significant financial burden for property owners, especially if they are already struggling to find tenants for their properties.
The impact of void business rates is not limited to property owners alone. Tenants who lease commercial properties are also affected by these rates. In some cases, tenants may be responsible for paying void business rates if they are leasing a property that remains vacant. This can add a significant cost to their monthly rent payments and may even make it difficult for them to afford the property. As a result, many tenants may choose to terminate their leases early or seek out other, more affordable options.
So, what can property owners and tenants do to mitigate the impact of void business rates? One option is to seek relief from the local authority. In certain circumstances, property owners may be able to apply for relief from void business rates if their property is undergoing major renovations or repairs. This can provide some temporary relief from the financial burden of void rates and give property owners time to get their property back on the market.
Another option is to actively market the property and try to find a tenant as quickly as possible. By actively seeking out potential tenants, property owners can minimize the amount of time that their property remains vacant and, therefore, reduce the amount of void business rates that they have to pay. Additionally, offering incentives such as rent-free periods or reduced rents can help attract tenants and make the property more appealing.
In conclusion, void business rates are an important consideration for property owners and tenants alike. These rates can have a significant impact on the financial health of a commercial property and can make it more difficult to find tenants or afford rent payments. By understanding how void business rates are calculated and taking proactive steps to mitigate their impact, property owners and tenants can minimize the financial burden of these rates and keep their properties profitable and sustainable in the long run.