When a commercial property sits empty, not only does it fail to generate income for the landlord or owner, but it can also be a financial burden due to business rates. These rates, also known as non-domestic rates, are taxes levied on non-residential properties such as shops, offices, and warehouses. The issue of business rates on empty commercial property is a significant concern for property owners, businesses, and local authorities alike.
Business rates are based on the rateable value of a property, which is determined by the Valuation Office Agency. The charges are set by the government and are payable by the occupier of the property. However, when a property stands vacant, the responsibility for paying these rates falls onto the landlord or owner.
The impact of business rates on empty commercial property is twofold. Firstly, the rates can be a significant financial burden for property owners. In some cases, the rates on vacant properties can be as much as 90% of the normal rates. This can make it difficult for property owners to afford to keep the property empty, especially during times when demand for commercial space is low.
Secondly, business rates on empty commercial property can also act as a disincentive for property owners to bring vacant properties back into use. If a property is liable for business rates, it may be more financially viable for the owner to leave the property empty rather than incur the extra costs associated with renting or selling it. This can lead to an increase in the number of empty properties in an area, which can have a negative impact on the local economy and community.
Local authorities are also affected by business rates on empty commercial property. When properties stand vacant, they generate less revenue for the council in terms of business rates and other associated taxes. This can put pressure on local services and infrastructure, as the council has less money to spend on essential services such as schools, hospitals, and public transport.
In recent years, there have been calls for reform of the business rates system to address the issue of empty commercial property. One proposal is to introduce a system of rates relief for vacant properties, whereby the rates payable on empty properties are reduced or waived entirely. This could help to incentivize property owners to bring vacant properties back into use, as they would not be faced with the financial burden of paying full business rates on a property that is generating no income.
Another suggestion is to introduce more flexible rates payment schedules for vacant properties, allowing property owners to spread the cost of business rates over a longer period of time. This could make it easier for property owners to manage their cash flow and potentially reduce the financial impact of paying rates on empty properties.
Some local authorities have already taken steps to address the issue of business rates on empty commercial property. For example, in Scotland, the government has introduced a business rates relief scheme for empty properties. Under this scheme, properties that have been empty for a certain period of time are eligible for a reduction in their rates liability. This has helped to encourage property owners to bring vacant properties back into use and has reduced the number of empty properties in some areas.
Overall, the issue of business rates on empty commercial property is a complex and challenging one. It can have a significant financial impact on property owners, businesses, and local authorities, and can act as a disincentive for bringing vacant properties back into use. Reforms to the business rates system, such as rates relief schemes and more flexible payment schedules, could help to address this issue and encourage the reuse of empty commercial properties. Ultimately, finding a solution to the problem of business rates on empty commercial property is essential for supporting a vibrant and sustainable economy.