As part of the 2016/2017 draft Budget, Finance Secretary John Swinney has announced a number of significant changes to the business rates regime in Scotland.
The changes include the removal of the existing 100% rates relief for owners of empty industrial properties in Scotland and reducing the rates relief available to owners of empty retail and office premises. Previously owners of empty industrial properties which were vacant received full relief and therefore had no business rates liability.
He also announced that in 2016/2017, the overall business rate paid by occupiers of properties with a rateable value over £35,000 will be set at more than 50p in the pound. Together these measures will raise approximately £130 million of income for the Scottish Government.
Brian Rogan, Head of Business Rates in Scotland for CBRE, commented: “The news that there will be an increased business rates burden for properties with a rateable value over £35,000 will be most unwelcome from the business community.
“It will be important for the Scottish Government to monitor whether the effects of these changes will bring empty properties across Scotland back into use.”
Douglas Smith, chairman of CBRE in Scotland, added: “Changes in the relief available for empty commercial property, which will impose additional costs on owners and developers alike, are unhelpful to both the commercial property and construction sectors.
“In most parts of Scotland speculative commercial development is not yet viable as the extent of recovery enjoyed in other parts of the UK has not yet reached north of the border with any strength.
“Making provision for this additional cost burden will delay the point at which development viability is achieved and there must now be a real risk that wider UK markets turn downwards even before the Scottish markets have achieved levels of activity anywhere near “pre-recession” levels.
“At a time when private sector capital investment is being actively sought and encouraged this announcement is likely to have a depressing effect on that ambition.”