Our Thoughts
Thu, 11/04/2024 - 12:00
· 2 min read

Business Rates Relief: Is this the solution to local government finance woes in Scotland or another sticking plaster?

In their December 2022 budget, the Scottish Government announced that from 1 April 2023, the powers to administer empty property relief (EPR) would be devolved to individual local authorities. In theory, this meant that 32 different EPR systems would have been in place.

Prior to powers being devolved, vacant land and listed buildings received 100% rates relief (indefinitely), industrial properties 100% for 6 months, and other bulk classes (shops and offices) 50% for the first 3 months and 10% thereafter.

Fortunately, given the limited timescales in place to change their policies, most local authorities retained the existing EPR available to ratepayers.

However, a worrying trend was set by the select few that did make changes, with each removing existing land and listed building relief and industrial relief. Depending on the local authority, these were replaced with 50% relief for 3 months, followed by either 10% relief for a limited period, or none at all.

In devolving the powers, the Scottish Government has added a degree of complexity that will almost certainly create confusion and inefficiencies for anyone with property interests in multiple council areas.

Local authorities are under increasing pressure to generate more income and see changing EPR as the short-term solution to resolving this issue almost immediately.

However, in our opinion this narrow view may have consequences for the landscape of our towns and cities. Landlords want to let their properties; they do not want to see the buildings that they own sit vacant. If we specifically consider listed buildings, the upkeep of these is generally expensive and removing 100% relief will have a detrimental impact on an owner’s ability to maintain such properties.

Investors will not wish to purchase properties that have not been maintained, nor will occupiers wish to lease them.  Yet landlords will be forced to sell as it is not sustainable to shoulder the increased EPR burden. Let’s also not forget that many of these landlords are investment managers who look after our pensions.  Will they risk acquiring properties in Scotland if more viable investments are available elsewhere in the UK?

Perversely, we see these decisions creating a situation of more properties sitting vacant and falling into disrepair because of EPR being diluted. Instead of regenerated towns and cities, Scotland’s landscape could be one of empty and derelict buildings.

To illustrate the difficulties property owners face, Glasgow, Edinburgh and Aberdeen City Councils all have differing EPR policies.

Glasgow and Edinburgh’s changes came into effect from 1 April 2024. With the two largest councils in Scotland adopting more restricted EPR policies, we expect that others will follow suit. By 1 April 2025, we may see EPR available to all property types for only 3 months at 50% and thereafter at either 10%, or even removed completely.  

We will of course be monitoring any further changes closely and will provide an update to our clients and the wider market in due course.


By John Russell, Director - Business Rates

Business Rates Relief: Is this the solution to local government finance woes in Scotland or another sticking plaster?