Business rates are a significant cost that property owners have to factor in when owning real estate. However, when a property sits vacant, the burden of business rates on empty property can become a financial strain on the owner. In the UK, properties that are empty for an extended period are subject to business rates, which can add up to thousands of pounds in additional expenses.
For property owners looking to avoid paying business rates on empty properties, there are several strategies to consider. By being proactive and strategic, property owners can minimize the impact of business rates on their bottom line. Here are five strategies to help property owners avoid business rates on empty property:
1. Temporary occupation
One effective strategy to avoid business rates on empty property is to temporarily occupy the space. By allowing a temporary occupation of the property, the owner can benefit from exemptions or reductions on their business rates bill. For instance, allowing a charity or community group to use the property for a limited period can qualify the property for a temporary rate relief scheme. This can help offset the cost of business rates while also providing a benefit to the community.
2. Renovation or redevelopment
Another option to avoid business rates on empty property is to invest in renovating or redeveloping the property. By actively working on a property that is considered empty, the owner may be able to qualify for exemptions or discounts on their business rates. For example, properties undergoing major renovation works may be eligible for empty property relief or a reduced rate for a set period of time. By investing in improvements to the property, owners can not only enhance the value of their asset but also reduce their business rates liability.
3. Short-term agreements
Property owners can also explore short-term agreements with tenants to avoid paying business rates on empty properties. By entering into short-term leases or licenses, owners can maintain occupancy of the property and generate rental income while also qualifying for an exemption from business rates. This can be a win-win situation for both parties, as tenants benefit from flexible leasing terms while owners avoid the financial burden of business rates on vacant properties.
4. Splitting or merging properties
Another strategy to consider is splitting or merging properties to reduce business rates liability. In some cases, combining two or more properties into a single unit can result in a lower rateable value, which can lead to savings on business rates. Conversely, splitting a larger property into smaller units may enable each unit to qualify for small business rates relief or other exemptions. By strategically restructuring the property portfolio, owners can optimize their business rates costs and maximize their financial savings.
5. Appealing the rateable value
Lastly, property owners can explore the option of appealing the rateable value of their property to reduce their business rates liability. If owners believe that the rateable value of their property is inaccurate or unfair, they can submit a formal appeal to the Valuation Office Agency (VOA) to have it reassessed. By providing supporting evidence and documentation, owners may be able to successfully reduce the rateable value of their property, resulting in lower business rates bills. It is important to note that appealing the rateable value can be a complex process, so owners may benefit from seeking professional advice to navigate the appeals process effectively.
In conclusion, avoiding business rates on empty property requires proactive and strategic planning on the part of property owners. By considering strategies such as temporary occupation, renovation or redevelopment, short-term agreements, splitting or merging properties, and appealing the rateable value, owners can minimize the financial impact of business rates on their vacant properties. By exploring these options and taking proactive steps to manage their business rates liability, property owners can effectively control costs and optimize the value of their real estate assets.