Business rates can be a major expense for property owners, especially when their buildings sit empty. In the UK, non-domestic rates, commonly referred to as business rates, are charged on most non-residential properties. These rates can be a significant financial burden for property owners, especially if they are struggling to find tenants or buyers for their vacant buildings.
However, there are ways to legally reduce or even avoid paying business rates on empty property. In this article, we will explore some strategies that property owners can use to minimize the impact of business rates on their vacant buildings.
1. Temporary occupation
One way to avoid paying business rates on empty property is by temporarily occupying the building yourself or allowing someone else to use the space. By doing so, you may be able to claim an exemption from business rates for a certain period of time.
For example, if you are carrying out renovation works on the property, you may be eligible for a temporary exemption from business rates. Likewise, if you allow a charity to use the building for a short period, you may not have to pay business rates during that time.
2. Short-term leases
Another strategy to avoid business rates on empty property is to enter into short-term leases with tenants. This can be a win-win situation for both parties – the tenant gets a temporary space to operate their business, while the property owner can avoid paying full business rates on the empty building.
Short-term leases can be particularly useful for property owners who are struggling to find long-term tenants for their vacant buildings. By offering flexible lease terms, you can generate some income from the property while also avoiding the full cost of business rates.
3. Empty property relief
In some cases, property owners may be eligible for empty property relief, which can significantly reduce the amount of business rates they have to pay on their vacant buildings. Empty property relief is available for certain types of property, such as industrial or warehouse buildings, that have been empty for a certain period of time.
To qualify for empty property relief, the property must be completely empty and not used for any business purposes. Property owners may be eligible for a 100% exemption from business rates for the first three months that the property is empty, followed by a 50% reduction for the next three months.
4. Class H exemption
Another way to avoid paying business rates on empty property is to claim a Class H exemption. This exemption applies to properties that are undergoing or have recently undergone major structural repairs or alterations. Property owners may be eligible for a 12-month exemption from business rates if they can prove that the building is not in a fit state to be occupied.
To qualify for a Class H exemption, property owners must provide evidence of the structural repairs or alterations that are taking place on the building. This exemption can provide significant cost savings for property owners who are investing in the renovation of their vacant buildings.
5. Business rates mitigation services
Finally, property owners who are struggling to find tenants for their empty buildings may want to consider hiring a business rates mitigation service. These services specialize in helping property owners reduce the amount of business rates they have to pay on their vacant buildings.
Business rates mitigation services can negotiate with local authorities on behalf of property owners to secure exemptions or reductions in business rates. While these services typically charge a fee for their assistance, the potential savings on business rates can more than offset the cost.
In conclusion, avoiding business rates on empty property is a challenge that many property owners face. However, by exploring the strategies outlined in this article, property owners can minimize the financial impact of business rates on their vacant buildings. Whether through temporary occupation, short-term leases, empty property relief, Class H exemptions, or business rates mitigation services, there are options available to help property owners reduce their business rates bill. By taking advantage of these strategies, property owners can protect their bottom line and make the most of their empty properties.