Understanding Void Business Rates: What You Need To Know

In the world of business and commercial properties, there are many factors that can impact the financial health of a company. One such factor is business rates, which are taxes that businesses pay on their non-residential properties. These rates are calculated based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA).

However, there is a special category of business rates known as void business rates. void business rates are rates that are charged on unoccupied commercial properties. This means that even if a property is vacant and not generating any income, the owner is still required to pay business rates on it.

So why are void business rates charged on empty properties? The reasoning behind this policy is that business rates are used to fund local services and infrastructure in the area where the property is located. Even if a property is empty, it still benefits from these services and therefore should contribute to the funding of them.

The charging of void business rates can be a significant financial burden for property owners, especially in situations where the property is vacant for an extended period of time. This is because, in addition to not generating any rental income, the owner must also pay the business rates on the property.

One common misconception about void business rates is that they only apply to commercial properties that are completely empty. In reality, void business rates can also be charged on properties that are partially occupied or undergoing refurbishment. As long as the property is not being used for business purposes, void business rates are applicable.

There are certain exemptions and reliefs available for void business rates, which can help property owners reduce the financial impact of having empty properties. One such relief is the empty property relief, which provides a 100% discount on business rates for the first three months that a property is empty. After the initial three-month period, the property owner may be eligible for a 50% discount on the rates.

Another relief that property owners can apply for is the industrial property relief, which provides a 100% discount on void business rates for certain types of industrial properties that have been empty for a specified period of time. Additionally, charities and community amateur sports clubs may be eligible for relief on void business rates.

Despite these exemptions and reliefs, void business rates can still pose a challenge for property owners, particularly in a tough economic climate or when demand for commercial properties is low. In some cases, property owners may be forced to lower their rental rates in order to attract tenants and avoid paying void business rates.

There are also instances where property owners may choose to demolish or redevelop their empty properties in order to avoid paying void business rates. This can be a costly and time-consuming process, but for some property owners, it may be the most viable option in order to mitigate the financial impact of void business rates.

In recent years, there have been calls for reforms to the system of void business rates in order to make it fairer and more equitable for property owners. Some have argued that void business rates discourage property owners from investing in their properties or leaving them empty for extended periods of time, which can have a negative impact on the local community and economy.

In conclusion, void business rates are an important aspect of the commercial property market that property owners need to be aware of. While they can be a financial burden, there are exemptions and reliefs available that can help mitigate their impact. Property owners should carefully consider their options and seek professional advice in order to effectively manage void business rates and minimize their financial liability.