Out-Law News 2 min. read
24 Jan 2013, 10:54 am
The new relief, which will complement the existing 'Fresh Start' relief scheme for long-term empty properties, will run for three years from 1 April and cover empty newly-built properties for up to 18 months. Local Government Minister Derek Mackay said that more details would be announced "shortly".
"Scotland already has the most competitive rates regime in the UK, worth more than £500 million annually, and it's important that in tough times we listen to our developers and our business community and take steps to encourage their continued investment in the economy," he said.
"Through this new relief and our Fresh Start initiative, we are encouraging people to invest in Scotland, set up shop, and capitalise on the business opportunities we offer. We recognise the importance of our business rate reliefs in stimulating economic growth and in maximising opportunities to secure investment and jobs for our communities," he said.
The introduction of the new relief will come six months before the introduction of a similar exemption in England, as announced by the Government last month. It is due to consult shortly on a proposed exemption, which will apply for the first 18 months that properties completed between 1 October 2013 and 30 September 2016 are left lying empty.
Business rates are charged on most non-domestic premises including shops, offices, warehouses and factories. Owners of vacant office and shops in Scotland currently receive a 50% discount on their business rates liability, while owners of industrial properties and listed buildings receive 100% relief. From April, the 50% relief will be cut to 10% after three months, although empty industrial properties and listed buildings will continue to receive 100% relief.
The 'Fresh Start' scheme, announced as an amendment to the Unoccupied Properties Act in September, will also begin from 1 April. The scheme allows new occupants of shops or offices that have been empty for at least a year to apply for a 50% discount on their business rates over their first year of occupation. The Act also introduces the cuts to empty property rates relief, and will allow local authorities to charge up to double the current rate of council tax on certain empty homes after one year.
Property law expert Russell Munro of Pinsent Masons, the law firm behind Out-Law.com, said that speculative development had been "uncommon" in recent years as a result of the economic downturn. Measures to encourage the building of new commercial property, which can take a long time to let, were to be welcomed, he said.
"The availability of Grade A space is continuing to dwindle with the lack of new development and will inevitably struggle to accommodate demand as the economy improves," he said. "It would seem that there is definitely an opportunity there, and hopefully the new relief on speculative development will help enable property developers to capitalise on that."
