Dramatic changes to empty property relief take place from today - 1 April - which are an unprecedented, punishing blow to the industrial market.
Until now, empty industrial property obtained 100% relief when vacant. This will now only apply for the first six months of the property being empty, after which time the level of relief will be reduced to just 10%. This means a landlord or developer will be responsible for 90% of the full rates liability on any vacant industrial, warehouse or store property. For a vacant property with a Rateable Value of £100,000, this will mean a rates bill jumping from £0 to £45,000.
For other commercial property (offices and retail) which previously obtained 100% relief for the first three months, the relief is now being reduced to 50%, and thereafter the level of relief has been reduced to 10%.
John Swinney has previously commented that “Scotland’s businesses are the key to creating jobs and boosting prosperity” and that “our system of business rates must minimise barriers to investment, be responsive to the economic conditions and support long term economic growth and investment”.
But the abolition of vacant rates relief is incongruous with Mr Swinney’s statement, as rating partner Tim Bunker says:
“This increase in vacant rates liability on developers and landlords will deter any future new development and lead to the demolition of older property, which will reduce industrial stock throughout Scotland.
“There will be no incentive for developers to build new speculative industrial buildings as this extra cost will have an adverse effect on value and can only lead to an increase in rents to nullify this extra cost.
“Prior to this new legislation, Scotland had a distinct advantage over England in attracting industrial investment due to our competitive business rates policy, but under this new legislation this is no longer the case.”