Understanding The Impact Of Void Business Rates

When a commercial property is left unoccupied, it may become subject to void business rates. These rates are a significant financial burden for property owners and can have a significant impact on their cash flow. Understanding void business rates and how they are calculated is essential for property owners and investors.

void business rates are a form of tax that commercial property owners must pay on properties that are empty for an extended period. The rates are designed to ensure that property owners are still contributing to local government revenue, even if the property is not generating any income.

In the UK, void business rates are set at 50% of the full business rates after the property has been empty for three months. This means that property owners are required to pay half of the normal business rates even if the property is not being used. After the property has been empty for six months, the void business rates increase to 100% of the full business rates.

The calculation of void business rates is based on the rateable value of the property. The rateable value is an estimate of the yearly rental value of the property as determined by the Valuation Office Agency. Property owners can find out the rateable value of their property by checking the Valuation Office Agency’s website or contacting them directly.

To calculate void business rates, property owners must multiply the rateable value by the appropriate multiplier. For properties in England, the standard multiplier for the 2021-2022 financial year is 51.2p. This multiplier is used to determine the full business rates payable on the property. For properties that have been empty for three months or more, the void business rates are calculated by multiplying the rateable value by half of the standard multiplier.

void business rates can be a significant financial burden for property owners, especially if the property remains empty for an extended period. In addition to paying void business rates, property owners may also incur other costs associated with maintaining an empty property, such as security, maintenance, and insurance.

There are several ways that property owners can mitigate the impact of void business rates. One option is to apply for an exemption or relief. In some cases, property owners may be eligible for relief from void business rates if the property is undergoing renovations or repairs. Property owners should check with their local council to see if they qualify for any exemptions or relief.

Another option for property owners is to consider leasing the property on a short-term basis to generate some income and avoid paying void business rates. Short-term leases can be a way to generate income from an empty property while still maintaining control over the property for future use.

Property owners can also explore other options such as using the property for storage or other temporary uses to generate income and offset the cost of void business rates. By thinking creatively and exploring different options, property owners can minimize the financial impact of void business rates on their businesses.

In conclusion, void business rates are an unavoidable cost for property owners with empty commercial properties. Understanding how void business rates are calculated and exploring options for mitigating their impact is essential for property owners looking to minimize their financial burden. By being proactive and creative, property owners can find ways to generate income from empty properties and offset the cost of void business rates.