Business rates can be a significant financial burden for property owners, especially when the property is empty. In the UK, owners of empty commercial properties are required to pay full business rates after a three-month exemption period. This can be a major deterrent for property owners looking to fill vacancies and generate income. However, there are ways to legally avoid paying business rates on empty property. This article will explore seven strategies to help property owners mitigate the financial impact of vacant properties and avoid costly business rates.
1. Temporary occupation
One of the most effective ways to avoid paying business rates on empty property is to encourage temporary occupation. By allowing a temporary occupant to use the property for a short period of time, the property owner can potentially qualify for an exemption from business rates. This could include allowing a charity to use the property for fundraising events or hosting temporary pop-up shops. By demonstrating that the property is actively being used, property owners can potentially avoid paying business rates.
2. Short-term leases
Property owners can also consider entering into short-term leases with tenants to avoid paying business rates on empty property. By leasing the property for a short period of time, property owners can demonstrate that the property is not vacant and potentially qualify for a temporary exemption from business rates. Short-term leases can also help reduce the financial burden of empty properties by generating rental income during periods of vacancy.
3. Renovation and improvement works
Another way to avoid paying business rates on empty property is to invest in renovation and improvement works. By demonstrating that the property is undergoing significant renovation or improvement, property owners can potentially qualify for an exemption from business rates. Renovation works can help increase the property’s market value and attractiveness to potential tenants, while also allowing property owners to avoid paying business rates during the renovation period.
4. Demolition and rebuilding
In some cases, property owners may consider demolishing the existing structure and rebuilding a new property to avoid paying business rates on empty property. By demolishing the property and starting anew, property owners can potentially qualify for a full exemption from business rates until the new property is completed and occupied. While this option requires a significant investment of time and money, it can be a viable strategy for avoiding business rates on long-term vacant properties.
5. Change of use
Property owners can also consider changing the use of the property to avoid paying business rates on empty property. By changing the property’s designated use to a category that is exempt from business rates, property owners can potentially avoid paying business rates altogether. For example, converting a vacant office building into residential apartments could qualify for a change of use exemption from business rates. Property owners should consult with a professional advisor to determine the most suitable change of use strategy for their specific property.
6. Empty property relief
In some cases, property owners may be eligible for empty property relief, which provides a partial exemption from business rates on empty property. Property owners may qualify for empty property relief if the property is undergoing renovation, is prohibited from occupation by law, or is a listed building. Property owners should check with their local council to determine their eligibility for empty property relief and to apply for the exemption.
7. Seeking professional advice
Property owners facing challenges with business rates on empty property should consider seeking professional advice from a qualified advisor. Property advisors and surveyors can provide valuable guidance on strategies to mitigate the financial impact of empty properties and avoid paying costly business rates. By working with experienced professionals, property owners can develop a tailored plan to address their specific needs and objectives.
In conclusion, avoiding business rates on empty property can be a challenging task for property owners. However, by implementing strategies such as temporary occupation, short-term leases, renovation works, change of use, and seeking professional advice, property owners can effectively mitigate the financial impact of empty properties and avoid paying costly business rates. Property owners should carefully evaluate their options and develop a comprehensive plan to address their specific circumstances and goals. With the right strategies in place, property owners can successfully navigate the complexities of business rates on empty property and achieve financial sustainability.