Vacant property expert Shaylesh Patel talks us through business rates, shedding light on what they are, who uses them, and the silver linings they offer for both landlords and the local community.
With the cost of rent rising, it is becoming harder for landlords to rent out spaces at an affordable price, and even harder for lower-income groups to occupy space. Understanding business rates and the variables they are affected by is an important step (for both parties) towards economic and social impact; landlords can still profit from offering a rent-free period to a low-income party.
In this brief Q&A video, Shaylesh answers 3 questions, explaining what business rates are, how they impact the state of our high streets and how empty business rates have helped to incentivise more community-oriented uses of high streets.
What are business rates?
- A form of property tax set out by National Government & the Valuation Office Agency.
- They are based on location, size, and the type of space i.e. retail, office, warehouse.
- Some exceptions include student accommodation and listed buildings.
Who uses them?
- They are collected by Local Councils.
- The majority are relayed back to National Government.
- A portion is retained to be spent by Local Government.
Who pays business rates?
- The space occupier.
- The landlord, if the space is unoccupied.
So, how do business rates impact the state of our high streets?
Business rates manifest even when a space isn’t occupied. Often this incentivises landlords to activate their spaces with use to offload the tax. However, a challenge lies in finding an occupier who is able to pay it; the cost of business rates is not based on profit, so it can create a burden for those with lower incomes. However, certain businesses can benefit from a huge reduction in the rate they have to pay, known as ‘business rates relief.’
Charitable organisations can also receive business rates relief, which makes landlords more willing to invite community groups/charities into their spaces rent-free. Shaylesh comments on how this benefits both sides of the equation, providing a space rent-free to a group who do amazing work for the local community, and at the same time saving some money for the landlord by avoiding empty business rates.
About the expert
Shaylesh Patel is the Director of ASTOP Limited, where he advises the charity sector, commercial landlords, and CSR budget holders on empty property and related financial matters. He also founded and volunteers for Temporary Use Aid, a charity that helps community groups to make the most use of vacant rent-free space safely.
Astop Limited was founded in May 2013. Since then, it has managed to repurpose over 500 empty properties, ‘benefitting both landlords and communities through a symbiotic commercial combination of business rates relief and charitable activities’. ASTOP have worked with Landlords including the likes of Savills, British Land, Landsec, Barclays and CBRE.
Examples of charities that Shaylesh has worked with include Suited & Booted, Rainbow Rising, GET (Global Educational Trust) and Farplace. Those that have benefitted from a smaller, desk-style space include Scarborough Survivors, Citizens Advice, Mind and Groundwork.
Landlord benefits of ASTOP charity occupation:
- Reduction in business rates burden
- Benefits to neighbouring tenants e.g. footfall
- Greater community contribution
- Increased likelihood of finding a tenant or obtaining planning consent
- Reduced risk of squatters, disrepair & insurance
- Vacant possession in 4 weeks