When a commercial property sits empty, landlords can often find themselves facing a hefty bill in the form of business rates. These rates, also known as non-domestic rates, are taxes levied on commercial properties by local authorities in the UK. However, there is a potential way for landlords to avoid paying these rates through an exemption known as the empty rates exemption.
The empty rates exemption allows landlords to claim relief from paying business rates on commercial properties that are empty for a certain period of time. This relief can be a valuable cost-saving measure for landlords who find themselves with vacant properties, as it can help to ease the financial burden of owning an empty property.
So, how does the empty rates exemption work, and who is eligible to claim it? In this article, we will provide an overview of the empty rates exemption and delve into the criteria that landlords must meet in order to qualify for this valuable relief.
In the UK, empty commercial properties are generally subject to business rates after a period of three months. However, landlords can apply for the empty rates exemption, which provides relief from paying business rates on properties that have been empty for a certain period of time. The length of the exemption period varies depending on the type of property and the circumstances surrounding its vacancy.
For example, industrial properties are generally exempt from business rates for the first six months that they are empty, while offices and retail properties are exempt for the first three months. After this initial period, landlords may still be eligible for partial relief on their business rates bill, depending on the circumstances.
In order to qualify for the empty rates exemption, landlords must meet certain criteria set out by the government. Firstly, the property must be genuinely empty – this means that it cannot be used for any commercial activity, even if it is not generating any income. Secondly, the property must have a rateable value above a certain threshold, which is currently set at £2,900 in England and Wales.
Landlords must also be able to demonstrate that they are actively marketing the property for rent or sale in order to qualify for the empty rates exemption. This means that landlords must provide evidence of efforts to find a tenant or buyer for the property, such as advertising listings, conducting viewings, and engaging with potential tenants or buyers.
It is important to note that the empty rates exemption only applies to properties that are completely empty. If a property is partially occupied or used for storage, landlords may not be eligible for relief from business rates. Additionally, if a property is being refurbished or undergoing renovation work, landlords may still be liable for business rates during this period.
For landlords who qualify for the empty rates exemption, the financial benefits can be significant. By claiming relief from business rates, landlords can save money on their property expenses and reduce the financial impact of owning an empty property. This can be particularly valuable for landlords who are facing financial difficulties or struggling to find tenants for their commercial properties.
In some cases, landlords may be able to claim additional reliefs or exemptions on their business rates bill, depending on the specific circumstances of their property. For example, properties that are used for charitable purposes or are undergoing structural repairs may be eligible for further relief from business rates.
In conclusion, the empty rates exemption can be a valuable cost-saving measure for landlords who find themselves with vacant commercial properties. By meeting the criteria set out by the government and actively marketing their properties, landlords can qualify for relief from business rates and reduce the financial burden of owning an empty property. In a competitive market where commercial properties are often difficult to rent or sell, the empty rates exemption can provide much-needed financial relief for landlords.