Forthcoming changes to property relief in Scotland could create 'uneven playing field', says property consultancy Knight Frank

New rules being implemented as part of changes to the non-domestic rates system in Scotland could cause confusion for landlords and property investors, according to Knight Frank.

The property consultancy, which in Scotland has offices in the likes of Edinburgh, Glasgow, Aberdeen, and Melrose, says that among the adjustments being brought in as part of the most recent settlement between the Scottish Government and local authorities, empty property relief will be devolved to councils from April 1 of this year, allowing them to set different rules and conditions for exemption.

Knight Frank added that under the current relief regime applied nationally, vacant industrial properties are given 100 per cent for six months, followed by 10 per cent, but some local authorities have already proposed changes and others will likely choose to do so, with the reliefs set to be reviewed annually. The firm added that Aberdeen City Council, for example, has proposed that vacant industrial properties will receive three months of 50 per cent relief on rates, then falling to 10 per cent, while neighbouring Aberdeenshire Council is planning to maintain the current regime for rates relief, “creating quite different systems only a few miles apart”.

Scott Hogan, head of Scotland industrial and logistics at Knight Frank, said: “The new rules mean that local authorities can, and likely will, have different reliefs across Scotland, creating an uneven playing field. This will introduce an added degree of complexity for landlords and investors, and will almost certainly create confusion for anyone with property interests in multiple council areas.

Knight Frank is concerned about the prospect of 'creating quite different systems only a few miles apart'. Picture: contributed.

“Councils are under pressure to collect more income and, understandably, reducing rates relief may seem like a simple way of bringing in more money. However, I am yet to encounter a landlord who does not want to let their property, so it will be especially punitive to those who are already struggling to secure occupiers and will add risk for any new investors looking at Scotland.

“The changes mean that landlords need to seriously consider how they manage their properties 12 months ahead of any lease expires to ensure that void periods are kept to a minimum. This includes early engagement on dilapidations – a process that can take months to conclude in itself – and re-marketing of properties at least six months ahead of a possible vacancy.”