David Peck: Cutting empty property rate relief will cost Scotland dear

Published on Thursday 17 November 2011 00:00

The Scottish Government has proposed reducing empty property rate relief from 50 per cent to 10 per cent. The intention is to provide an incentive for the re-use of empty shops in high streets. The cut will cost the commercial property industry, businesses and public sector bodies around £18 million per annum from April 2013.

We recognise the government must look at additional routes to generate funding in these times of austerity, but a cut in empty property rates relief will harm Scotland. It will be a deterrent to investment and take away Scotland’s competitive edge. It will threaten development, leading to developers only progressing schemes when they have a specific tenant lined up. It will also lead to vacant property being demolished. This will result in a lack of prime property stock and a lack of ability to attract retailers and businesses.

Empty property relief supports ratepayers who are deriving no income or use from a commercial property. It is therefore a tax on failure for services that will never be received. This is a tenant-led market and landlords regularly offer considerable incentives to retain or attract businesses to their properties.

If properties are empty this is because of a lack of demand. The idea that property owners would deliberately keep shops empty rather than have paying tenants, generating income, is simply wrong.

This policy has failed in England, where occupancy has not increased as a result of withdrawing empty property relief. The Scottish Government has fundamentally underestimated the additional costs to businesses and the added burden to local authorities and companies who currently have excess stock. This sends a negative signal to the business community in Scotland and beyond.

It is important that ministers and MSPs take a full view of the implications of the proposed reforms and reconsider their potential impact on the economic prosperity of Scotland. l David Peck is managing director of Buccleuch Property and chairman of the Scottish Property Federation