When it comes to owning and managing commercial properties, there are a multitude of responsibilities and expenses that landlords must contend with. One of the most significant expenses that owners of empty listed buildings face is business rates. Business rates are a form of tax levied by the local government on non-domestic properties, including commercial buildings. However, when it comes to empty listed buildings, the rules and regulations surrounding business rates can be complex and confusing. In this article, we will explore the ins and outs of business rates on empty listed buildings and provide guidance on how landlords can navigate this tricky terrain.
Listed buildings are considered to be of historical or architectural significance and are therefore protected by law. Owners of listed properties must adhere to strict rules and guidelines when it comes to making alterations or renovations to their buildings. While owning a listed building can be a point of pride for many landlords, it also comes with its own set of challenges, particularly when it comes to business rates on empty buildings.
In the United Kingdom, owners of empty listed buildings are eligible for a 100% exemption on business rates for the first three months that the property is vacant. After this initial grace period, owners are required to pay full business rates on the property. This can be a significant financial burden for landlords, especially if they are struggling to find tenants for their empty listed building.
One of the key reasons why business rates on empty listed buildings can be so high is due to the valuations methodology used by the local government. Business rates are based on the rateable value of a property, which is determined by the Valuation Office Agency (VOA). The VOA assesses the value of a property by taking into account factors such as its size, location, and rental potential. For listed buildings, the VOA may assign a higher rateable value due to the property’s historical or architectural significance, even if it is currently vacant.
Another factor that can impact the business rates on empty listed buildings is the condition of the property. Listed buildings require ongoing maintenance and upkeep to ensure that they are preserved for future generations. If a listed building falls into disrepair due to neglect, the local government may impose additional penalties or surcharges on the property owner. This can further increase the financial burden on landlords who are already struggling to pay business rates on their empty buildings.
So, what options do landlords have when it comes to mitigating the business rates on empty listed buildings? One possible solution is to apply for a business rates relief or exemption. There are a number of relief schemes available for listed buildings, including discretionary relief for properties with a rateable value below a certain threshold, and hardship relief for landlords facing financial hardship. Landlords can also apply for transitional relief, which provides a gradual increase in business rates over a period of time.
In addition to relief schemes, landlords can also explore other avenues for reducing the business rates on their empty listed buildings. For example, landlords may be able to negotiate a lower rateable value with the VOA if they can provide evidence that the property is in poor condition or is unlikely to attract tenants in its current state. Landlords can also consider investing in improvements to the property to increase its rental potential and reduce the rateable value assigned by the VOA.
In conclusion, business rates on empty listed buildings can be a significant financial burden for landlords, particularly those who are struggling to find tenants for their properties. However, by understanding the rules and regulations surrounding business rates and exploring relief schemes and other options for reducing rates, landlords can navigate this complex terrain and ensure that their empty listed buildings remain an asset rather than a liability.