Empty commercial property rates, commonly known as business rates, are a significant financial burden for property owners. These rates are charged on most non-domestic properties, including offices, shops, warehouses, and factories, and are based on the rateable value of the property. The rateable value is determined by the Valuation Office Agency (VOA) and is used by local councils to calculate the rates bill.
The issue of rates on empty commercial property has been a contentious one, with many property owners arguing that they are unfair and can hinder economic growth. In response to these concerns, the government has introduced various measures to help alleviate the burden of empty property rates. However, these measures have not been without controversy, with critics arguing that they do not go far enough in addressing the issue.
One of the main criticisms of empty commercial property rates is that they can act as a disincentive for property owners to bring vacant properties back into use. Property owners are required to pay rates on empty properties after a three-month period, which can be financially crippling for those who are struggling to find tenants or buyers. This can lead to a vicious cycle, where property owners are unable to afford to refurbish or redevelop their properties, leading to further vacancies and a decline in the local area.
The impact of empty commercial property rates is particularly felt in areas that are already struggling economically. In these areas, vacant properties can blight the landscape and deter potential investors and businesses from moving in. This can have a knock-on effect on the local economy, leading to a decline in property values, reduced footfall for local businesses, and an increase in anti-social behavior.
One of the government’s responses to the issue of empty commercial property rates is the introduction of empty property rate relief. This relief allows property owners a 100% exemption from empty property rates for the first three months that a property is unoccupied. After this period, the relief can be extended by a further three months for industrial properties, or six months for other properties, depending on the circumstances.
While empty property rate relief can provide some welcome respite for property owners, critics argue that it is not enough to address the root causes of vacancy. Property owners still face the burden of rates after the relief period expires, which can exacerbate financial hardship and deter investment in vacant properties. Some argue that a more radical approach is needed, such as reducing or abolishing empty property rates altogether.
Another government measure aimed at addressing the issue of empty commercial property rates is the introduction of business rates retention. This system allows local councils to retain a proportion of the business rates collected in their area, providing them with an incentive to support local economic growth and property development. However, critics argue that the system is complex and can lead to disparities between different regions, with some councils benefiting more than others.
Property owners are also able to apply for hardship relief if they are struggling to pay their empty property rates. Hardship relief is granted at the discretion of the local council and is intended to provide temporary assistance to property owners facing financial difficulties. However, the criteria for hardship relief can be restrictive, and many property owners may not meet the eligibility requirements.
In conclusion, rates on empty commercial property are a significant financial burden for property owners and can act as a disincentive for bringing vacant properties back into use. While the government has introduced measures such as empty property rate relief and business rates retention to help address the issue, critics argue that these measures do not go far enough in tackling the root causes of vacancy. A more radical approach may be needed to provide long-term solutions and support economic growth in vacant properties.