Law Now has previously published articles on the plight of commercial building owners and/or occupiers, and business rates. We have covered the court cases surrounding the 2010 Valuation Roll, which can be read here, and the introduction of the Local Government Finance (Unoccupied Properties etc.) (Scotland) Bill, which can be read here. When the Unoccupied Properties Bill was first introduced in September 2012, it was put forward as a jump start to a commercial property market which at that time allowed 100% rate relief on empty buildings. The intention was to reduce this to 10% rate relief, in order to incentivise the owners to occupy or find occupiers for the buildings, and generate a tax saving of an estimated £18m per year.
Following the passing of that bill in December 2012, the Scottish Government unveiled a new proposal on 21 January 2013, which will offer non-residential building owners and commercial developers 100% business rates relief on new properties for 18 months following their completion. The plan will come into effect from 1 April 2013, and will run for three years. The proposal incentivises speculative commercial development, which supports the construction industry and is an important part of the economy.
The proposal is expected to provide between £5m - £10m in rates relief for businesses, according to Scottish Government figures. It largely mirrors a similar plan introduced for England & Wales after Chancellor George Osbourne was put under pressure from organisations such as the Business Gazette, the British Property Federation, the Business Centre Association and the Royal Institution of Chartered Surveyors.
In Scotland, the Local Government and Planning Minister Derek Mackay, who unveiled Monday’s proposals, had the following to say “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.” The announcement has been welcomed by groups such as CBI Scotland and the Scottish Property Federation.
The Scottish Government’s Fresh Start initiative was announced in September 2012 and created a 50% rates concession for new occupants of business properties which had lain empty for more than a year. The rates reduction lasts for the first year of the new tenants’ occupancy. This initiative was itself included as an amendment to the Unoccupied Properties bill, mentioned above. Fresh Start is due to begin on 1 April 2013, and is intended to help landlords find new commercial tenants.
The proposals have, however been criticised by the chief executive of the Scottish Chambers of Commerce. Liz Cameron stated “The government has now had to make concessions to its policy in the shape of trying to address lack of demand through its ‘Fresh Start’ scheme and now taking on the threat to speculative development through this new proposal for relief on new-build properties. Welcome though these measures are, they seem to represent a tacit admission that the government's plan to reduce empty property relief was flawed from the outset.”
Only time will tell if this interdependent triumvirate will work, but Law Now will provide further updates if the status quo is broken.