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Commercial Empty Property Rates

26 Sep 2017

If you have a commercial property standing empty, you’re likely to be losing out on money – no landlord wants to be out of pocket, but whilst you’re not receiving any rent from tenants, you might also be faced with a bill of your own. In some cases, you will be expected to subsidise a monthly rate for your property standing unoccupied.

Here, we outline the rules and regulations regarding commercial properties standing empty, and what charges you are likely to encounter if your building remains unoccupied.

First three months

Landlords are expected to pay a monthly rate when their commercial property is vacant. When your property becomes vacant, you must inform your local council. Whilst rates can differ based on location, the government stipulate that landlords don’t have to pay any business rates on empty buildings for the first three months that they are unoccupied. Following the three months, most landlords will then have to pay full business rates for any additional months that the property is empty.

There are some exceptions where extended empty property relief can be granted. These include:

  • Industrial premises, such as warehouses, are exempt for a further 3 months.
  • Listed buildings are exempt from business rates until they’re reoccupied.
  • Buildings with a rateable value under £2,900 are exempt until they’re reoccupied.
  • Properties owned by charities are eligible for an extension, only if the property’s next use will be mostly for charitable purposes.
  • Community amateur sports club’s buildings are eligible for an extension on empty property relief, only if the next use will be mostly as a sports club.

Monthly rates

Following a three month empty property relief, landlords will be expected to pay full business rates. Full business rate is the rate that would be paid if the property was to be occupied. Rates are chargeable on all empty unoccupied property, unless the property is classed as exempt or has a pre-agreed extended business rate relief.

Exemptions

There are a number of buildings which are exempt from paying business rates when the property is vacant – these include:

  • Agricultural land and buildings, including fish farms.
  • Buildings that are used for the training or welfare of disabled people.
  • Buildings registered for public religious worship or church halls.

However, these exceptions have strict legal requirements.

You also won’t pay empty property business rates for small businesses. You can claim relief if the property’s rateable value is less than £15,000 or if your business only used the one property. If your property’s rateable value is less than £12,000 you will not be expected to pay any business rates whilst it is vacant. However, if the value is between £12,000 and £15,000, you will have to pay some business rates but the relief means the cost will gradually go down from 100% to 0%.

There are some other circumstances whereby you might be eligible for exemption or business rate relief, for more information contact your local council.

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