Review of the Private Rented Sector: Volume 4: Bringing Private Sector empty houses into use

ANNEX 6: STATE AID AND SUPPORT GIVEN TO BRING EMPTY PROPERTIES BACK INTO USE.

Where a public body, such as a local authority or the Scottish Government provides funding in the form of grants or loans to commercial undertakings then the funding must be within the State aid rules and regulations.

Support to refurbish an empty property will result in a commercial gain as the whole aim of the scheme is that the owner will receive a rent (albeit very modest) and the property will start to appreciate in capital terms. However, there is an approved scheme Partnership Support for Regeneration (N293/2006) ⁵⁰ where funding can be provided which is State aid compliant as long as the relevant criteria are met.

The Partnership Support for Regeneration Scheme is a UK-wide scheme designed to increase the supply of affordable housing. In Scotland, it allowed Communities Scotland (as was) and local authorities to provide grant aid to developers of owner-occupied and rental accommodation in areas where such accommodation has real social or regeneration benefits. Aid awarded must be the minimum necessary to allow the project to proceed, and should not exceed the gap between the eligible cost of the development and the completed project sale value. The maximum amount of grant must not exceed 60% of project-related eligible costs. Those offering support need to check that no other public funding which might be considered as state aid has been received, to ensure that no double funding has occurred for the same eligible costs. A local authority seeking to offer such support should ensure that their scheme conforms to the (N293/2006) approved scheme.

Where expenditure cannot be offered under the Partnership Support for Regeneration approved scheme, then the body offering the support should ensure that any funding meets the de minimis aid regulations. de minimis aid cannot exceed â'¬200,000 over a 3 year fiscal period, and prior to making an award of de minimis the awarding public body must ask potential recipients for details of all other de minimis aid received in the preceding three fiscal years and ensure that by awarding further de minimis the â'¬200,000 ceiling will not be breached. It is preferable to provide funding under the Partnership Support for Regeneration approved scheme and only use de minimis aid when projects do not meet the criteria under (N293/2006) scheme. Little further guidance is available in Scotland; however, there is a publication in England ⁵¹ .

Further advice can be gained from the State Aid Unit which is part of the Scottish Government's Enterprise, Energy and Tourism Department ⁵² and has been set up to provide advice to local authorities and government.