In the world of real estate, owning a parking lot can be a lucrative investment With limited space and an increasing number of vehicles on the road, parking spaces are in high demand However, what happens when those parking spaces sit empty? Many property owners may not realize that empty car parking spaces are subject to business rates, which can cut into potential profits.
Business rates are taxes that businesses in the UK must pay on the commercial properties they occupy This includes not only shops and offices, but also car parking spaces Many property owners overlook the fact that empty parking spaces are still considered commercial property and are therefore subject to business rates.
The amount of business rates due on empty car parking spaces can vary depending on a number of factors One key factor is the rateable value of the parking area The rateable value is based on the rental value of the property as determined by the Valuation Office Agency (VOA) The VOA assesses the rateable value of a property every five years, taking into account factors such as location, size, and condition.
In addition to the rateable value, the amount of business rates owed on empty parking spaces also depends on the current business rates multiplier set by the government The multiplier is a percentage applied to the rateable value of a property to calculate the total amount due in business rates The current multiplier for England for the 2021/2022 tax year is 49.9p, meaning that for every £1 of rateable value, the property owner must pay 49.9p in business rates.
For property owners with empty car parking spaces, this can result in significant costs Not only are they missing out on potential rental income from the parking spaces, but they are also saddled with the burden of paying business rates on empty space empty car parking spaces business rates. This can eat into profits and make it more difficult to keep the parking lot financially viable.
So what can property owners do to minimize the impact of business rates on empty car parking spaces? One option is to apply for an empty property rates relief This relief allows property owners to claim a 100% exemption from business rates for a limited period of time on properties that are unoccupied and unfurnished However, this relief does not apply to empty parking spaces, as they are considered to be in use even when unoccupied.
Another option for property owners is to explore leasing out the empty parking spaces to third parties By entering into lease agreements with businesses or individuals in need of parking, property owners can generate income from the parking spaces and potentially offset the costs of business rates This can be a win-win situation for both parties, as the lessee gains access to parking while the property owner earns rental income.
Alternatively, property owners could consider developing the empty parking spaces into alternative uses that generate income This could include converting the spaces into storage units, installing electric vehicle charging stations, or partnering with ride-sharing services By repurposing the empty spaces in this way, property owners can diversify their income streams and potentially reduce the financial burden of business rates.
Lastly, property owners should regularly review the rateable value of their parking spaces with the VOA to ensure that they are accurate and up to date By keeping track of any changes in the rateable value, property owners can avoid overpaying on business rates and potentially save money in the long run.
In conclusion, empty car parking spaces are not exempt from business rates and can be a significant cost for property owners By understanding how business rates are calculated and exploring strategies to mitigate their impact, property owners can maximize their profits and make their parking lots more financially sustainable Whether through leasing out the spaces, repurposing them for alternative uses, or seeking relief options, there are ways to offset the costs of business rates and make the most of empty parking spaces.