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Home / Business Insurance / Commercial Building Insurance / Unoccupied Commercial Buildings Budget Announcement

Unoccupied Commercial Buildings Budget Announcement

Unoccupied Commercial Buildings Budget Announcement

Welcome welcome news in the budget to day, for owners of unoccupied commercial buildings. The chancellor stated’ Last year, I temporarily increased the threshold for empty property relief to help small businesses. I can announce it will be extended so that, for 2010-11, empty commercial properties with a rateable value below £18,000 will be exempt from business rates. Seventy per cent of all empty properties will continue to be exempt”.

Business Rates are of a major concern to most landlords or business owners, often proving to be one of the major concerns of business owners, they are in essence a tax on the owners or occupiers of non domestic commercial property. Business rates are usually calculated on the rental value of the property, usually around 43-45% of annual rent. making it one of the largest overheads any business has other than rent. The Valuation Office Agency (VO) of HMRC assesses the rateable value of all relevant properties in England and Wales and demands are usually issued each April. Every five years, a review is carried out and a new rating list is published. The rating list contains, the address and description of each property in it’s area, there are several types of property that are exempt from business rates, including: agricultural land and buildings, fish farms and most churches.

If a building becomes unoccupied, because the business closes down (as has been happening during the current economic downturn), then the rates must be paid by the landlord. Thus, this budget extension provides some good news for the owners of unoccupied buildings, whom have remaining problems in that they will still have overheads like arranging commercial building insurance. Because of the economic downturn, larger numbers of commercial buildings have become or have remained unoccupied, with the result that landlords will have to arrange insurance but are unable to recoup the premium from the tenant. One of the additional problems with this, is that unoccupied commercial building insurance is usually far more expensive that if the building were tenanted.

When approaching an insurer for an unoccupied commercial building insurance quote, certain’ risk improvements” may help to secure a lower premium ( even this will be higher than an occupied quote). The insurers will want to know about the security at the premises, what types of locks are in use at the premises, is there a burglar or fire alarm in operation. They may also need to know, how the building is being cared for, is someone visiting it on a regular basis. They will also want to know ( or may insist) that the water system is drained down and switched off at the mains. Commercial buildings are often easy targets for thieves and insurance rates are higher accordingly.

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