Commercial property: Economic viability vital with at-risk listed structures

The French Renaissance-style Ayr Station Hotel has seen a lack of investment since the 1970s.
The French Renaissance-style Ayr Station Hotel has seen a lack of investment since the 1970s.

This week, contractors engaged by South Ayrshire Council have extended the exclusion zone around Ayr Station Hotel for safety reasons.

Local MSP Brian Whittle has called for the 1885 building to be demolished and replaced with a modern transport hub.

Others believe that the forecast £3-million demolition costs would be better spent restoring the hotel to its former glory.

In the meantime, rail services in and out of Ayr station are being disrupted and the building’s crumbling edifice does not give a favourable impression.

Changes in VAT legislation are probably a major factor in the lack of investment in the B-listed hotel since it was acquired by a Malaysian owner in the 1970s.

Since 2012, there has been no VAT relief on alterations or repairs to listed buildings, which has had a devastating effect on organisations which own them.

The fact that, in many cases, alterations – not repairs – are the priority for listed buildings, may seem incongruous but, in fact, this is all about economic viability.

Many listed buildings must be altered or they will fall into disuse. Installing kitchens, disabled access or meeting rooms is often crucial to allow community groups to utilise the building.

Alterations may be required to create a viable business model, but costs can be prohibitive.

While listed buildings were always expensive to maintain, the removal of VAT relief may have been the tipping point for many owners evaluating whether to repair a listed building or sell up and cut their losses.

Under EU law, once a zero rating for VAT has been removed it can never be reinstated, although after Brexit, of course, that may change.

If an owner fails to keep a listed building in a good state of repair, local authorities have statutory powers to take action to safeguard the building but many councils do not have the resources to follow this course.

In the case of Ayr Station Hotel, as in so many others, the economic case for refurbishment is questionable.

Built in the days when Ayr was a fashionable resort, the creation of a large hotel in the French Renaissance style was based on sound business sense.

Today, the town does not attract tourists to the same degree.

It is hard to see how £3m would be sufficient to restore the hotel and enable it to function for contemporary use.

If there is no economic case for refurbishment and no market, it may be better to demolish and replace it with a building which meets the needs of residents and businesses.

However, Scottish Government policy regarding the demolition of listed buildings is that no worthwhile structure should be lost unless every effort has been made to find practical ways to keep it. There are several tests which need to be satisfied before consent for demolition is given.

In either case, the current owner of the building is unlikely to profit.

Where a local authority believes that a listed building has been allowed to fall into disrepair in order to justify its demolition and redevelopment of the site, it may seek a direction for minimum compensation.

The owner in such cases could receive as little as
£1 in compensation.

I suspect that South Ayrshire Council may be minded to do just that.

Martin Cassels is partner in charge of building surveying for Galbraith.