Empty shops and boarded-up storefronts have become a common sight in towns and cities across the UK. With the rise of online shopping and changing consumer preferences leading to a decline in footfall on the high street, many businesses are struggling to survive. To make matters worse, these struggling businesses are being hit with high business rates on their empty shops, adding to their financial burden and making it even more difficult for them to bounce back.
Business rates are a tax paid by businesses on non-residential properties, including shops, offices, warehouses, and factories. The rates are calculated based on the rateable value of the property, which is determined by the Valuation Office Agency (VOA) and multiplied by a government-set multiplier. For empty properties, the rateable value is still assessed, but the rates are subject to different rules and exemptions.
In the past, businesses with empty shops were granted a 100% exemption from paying business rates for the first three months, and then a 50% discount for the next three months. However, these rules have changed, and the exemptions and discounts are now at the discretion of local authorities. This has resulted in many businesses being hit with full business rates on their empty properties, even when they are struggling to stay afloat.
The impact of high business rates on empty shops is twofold. Firstly, it places an additional financial burden on businesses that are already struggling. Paying full rates on empty properties can eat into a business’s cash flow, making it harder for them to invest in their operations, pay staff wages, and cover other essential costs. This, in turn, can lead to more businesses closing down and more empty shops on the high street.
Secondly, high business rates on empty shops discourage property owners from bringing their properties back into use. Property owners are more likely to leave their shops empty if they know they will be hit with full rates, as they will not be able to generate any income from the property while it is vacant. This can lead to a vicious cycle of decline on the high street, with more and more shops sitting empty for extended periods of time.
In recent years, there have been calls for the government to reform the business rates system to better support struggling businesses and encourage property owners to bring their empty shops back into use. One proposed solution is to introduce a complete exemption from business rates for the first 12 months that a property is left empty. This would give businesses and property owners more time to find a new tenant or buyer for the property without being burdened by high rates.
Another suggestion is to introduce more flexible rates for empty shops, such as a sliding scale of discounts based on how long the property has been vacant. For example, property owners could be granted a 50% discount for the first six months, with the discount decreasing gradually over time. This would incentivize property owners to act quickly to find a new use for their empty shops and prevent them from sitting vacant for extended periods.
Some argue that business rates on empty shops are necessary to prevent property owners from deliberately leaving their shops empty to avoid paying rates on them. However, the current system is clearly not working for struggling businesses and the high street as a whole. Without reform, we could see more and more shops closing down, leaving our towns and cities with even more derelict and deserted storefronts.
In conclusion, the impact of business rates on empty shops is significant and needs to be addressed urgently. High rates on empty properties are adding to the financial burden of struggling businesses and discouraging property owners from bringing their shops back into use. The government must take action to reform the business rates system to better support businesses on the high street and prevent further decline. Only by addressing this issue can we hope to revitalize our towns and cities and create thriving, bustling high streets once again.