void business rates, also known as vacant business rates, refer to the taxes that commercial property owners are still required to pay even if their property is empty. This can be a significant financial burden for property owners, especially during times of economic downturn or when properties are difficult to fill. In this article, we will explore what void business rates are, why they exist, and how property owners can navigate this financial challenge.
The concept of void business rates dates back to the 1988 Local Government Finance Act, which gave local authorities the power to charge business rates on empty commercial properties. The rationale behind this legislation was to incentivize property owners to occupy and maintain their properties, rather than leaving them empty and potentially blighting the local area.
The idea was that by levying void business rates, property owners would be encouraged to actively market their properties and bring them back into use more quickly. This would not only benefit the property owner in terms of rental income but also contribute to the overall economic vitality of the area.
However, the reality is that void business rates can pose a significant financial burden for property owners, particularly during periods of economic instability or when certain sectors are struggling. This is because the rates are typically charged at the full non-domestic rate, regardless of whether the property is generating any income.
For property owners, this means that they may be facing a double whammy of lost rental income from an empty property and the added expense of void business rates. In some cases, this can make it financially unviable for property owners to keep their properties empty for an extended period, leading to a rushed or below-market rental agreement just to avoid paying the void business rates.
Moreover, the situation is further complicated by the fact that void business rates are calculated differently in different regions of the UK, with some areas offering exemptions or discounts for certain types of property or for properties that have been empty for a certain period of time. This lack of consistency can make it even more challenging for property owners to budget effectively and plan for the financial impact of void business rates.
So, what can property owners do to mitigate the financial impact of void business rates? One option is to make use of the various exemptions and discounts that are available in some areas. For example, properties undergoing major refurbishment or redevelopment may be eligible for a temporary exemption from void business rates, as long as certain conditions are met.
Another option is to actively market the property and try to find a tenant as quickly as possible. While this may seem obvious, the reality is that filling commercial properties can be a lengthy and complex process, particularly in a saturated market or during a downturn in the economy. However, finding a tenant quickly can help to offset the financial impact of void business rates and ensure that the property is generating some income, even if it is not at its full potential.
Property owners can also consider negotiating with their local authority to see if any discretion can be applied to their void business rates bill. While there are no guarantees that this will be successful, it is worth exploring all options to try and reduce the financial burden of void business rates.
In conclusion, void business rates can be a significant financial challenge for property owners, particularly during times of economic uncertainty. However, by understanding the reasons behind void business rates, staying informed about the exemptions and discounts that are available, and actively working to fill empty properties, property owners can navigate this financial hurdle and ensure that their properties remain profitable in the long run.