Non-domestic rates reform: analysis of responses to consultation on Barclay implementation

16. Barclay Review Recommendation 26 – Reform empty property relief (listed buildings and surcharge)

16.1 Question 24 relates to Recommendation 26, "To encourage bringing empty property back into economic use, relief should be reformed to restrict relief for listed buildings to a maximum of 2 years and the rates liability for property that has been empty for significant periods should be increased." The consultation stated that from 2020, empty listed property will receive 100% relief for 2 years. After this period, it will be eligible for the same relief as other types of empty property, this currently stands at 10% relief. Any property that is empty for more than 5 years, except for listed buildings, will pay a 10% bill surcharge after 5 years. This recommendation is intended to incentivise bringing all types of empty non-domestic property back into economic use. The BIAG suggested the planning process could be excluded from reforms, although it was recognised this could be open to abuse and an alternative suggestion was to allow local discretion.

Question 24 - What are your views on whether Councils should have discretion in the application of this measure for properties, so that local circumstances can be accounted for?

16.2 There were 71 responses to Question 24, the largest respondent categories were Local Authorities and Representative Bodies. No Assessors responded to this question. A breakdown of respondent categories can be found in the table below.

Table 24: Respondents Categorised

16.3 Across all respondent categories there was a strong consensus that Councils should have discretion over the application of this relief. It was noted that this would allow "local circumstances to be considered" in the application of the relief (Dumfries and Galloway Council) which may include "local needs / requirements / anomalies specific within the Council area to be dealt with which may not have affected other Councils" (Highland Council).

16.4 A small number of responses, which included Local Authorities, Businesses and Representative Bodies, did not agree with allowing local discretion. They raised concern that this would be a detriment to consistency in policy across Scotland.

16.5 A number of implementation concerns and unintended consequences were highlighted from those in favour as well as against local discretion or who expressed no clear opinion. The concerns included:

• A potential negative impact on townscapes due to a possible increase in dereliction. It was suggested that listed buildings are more expensive to maintain therefore if the relief was removed, they would be more likely to fall derelict or into disrepair. This concern was raised by Dundee City Council which did not express a view on whether local discretion was favourable.
• Aberdeen City Council, amongst others, speculated that if a ratepayer has properties that span across multiple local jurisdictions it may lead to complexities as one property may benefit from relief whereas one in a different jurisdiction may not.
• It was noted that listed buildings "can be difficult to lease and planning processes in these cases can be complex" (Institute of Revenues, Ratings and Valuations). Thus, it would be unfair to penalise owners or landlords of these properties.
• Any changes to existing relief could distort markets, leading to unequal beneficiaries of policy change. For example, some listed buildings won't ever be able to be brought back into active use.
• The Independent Education Sector noted the potential for the relief to unfairly financially burden some schools. The Scottish Council of Independent Schools noted there are 16 independent schools which are classified as Category A and more as Category B listed buildings.
• Finally, a number of responses believed that restricting relief to two years would be too short a period. The Scottish Property Federation, amongst others, stated that the two year period "is based on unrealistic expectations of the ability of even the best resourced property developers to turn around a vacant and listed empty property". Of the responses that stated the two year period would be too short, only the Rating Surveyors Association and West Lothian Council suggested an alternative timeframe of four or five years.