The Unoccupied Properties Bill, which will take effect from April, allows local authorities to cut business rates relief on certain commercial properties that have been left lying empty for more than three months. Local authorities will also be able to charge up to double the current rate of council tax on certain empty homes that have stood empty for more than a year.
Business organisations including CBI Scotland and the Scottish Property Federation (SPF) have described the changes as a "tax on distress". They argue that cutting empty property rates could increase the financial burden on already-struggling property owners by as much as £18 million per year.
However, Local Government Minister Derek Mackay said that despite the changes, the business rates regime in Scotland remained the most competitive in the UK.
"Empty commercial properties are a blight on our high streets and these reforms will help bring them back into use and bring new life to our town centres," he said. "Scotland already has the most competitive rates regime in the UK and this Bill will offer a fifty per cent discount to anyone bringing a shop or office that has been empty for twelve months back into use thanks to our new rates relief, Fresh Start."
Business rates are charged on most non-domestic premises including shops, offices, warehouses and factories. Owners of vacant offices and shops in Scotland currently receive a 50% discount on their business rates liability, while owners of industrial properties and listed buildings receive 100% relief. From April 2013, the 50% relief will be cut to 10% after three months, although industrial properties and listed buildings will continue to receive 100% relief.
New occupants of shops or offices that have been empty for at least a year will be able to apply for a 50% discount on their business rates over their first year of occupation under the Fresh Start scheme, which also takes effect from April.
Offices and shops in England and Wales get no relief whatsoever after three months, while relief on industrial buildings cuts off after the building has been lying empty for six months.
Housing Minister Margaret Burgess said that allowing local authorities to increase council tax charges on empty homes would encourage owners to bring properties back into use. There are more than 25,000 long-term empty homes in communities across Scotland, according to Scottish Government figures.
"While people across Scotland need new homes, it is completely unacceptable that 25,000 houses are lying empty long term and of no use to anybody," she said. "Not only that, empty homes can become a magnet for vandalism and anti-social behaviour, dragging down whole communities. The ability to increase council tax on empty properties will give councils a new and crucial tool to tackle this problem and encourage owners to bring homes back into use."
The Scottish Government recently consulted on draft council tax regulations to set out how the council tax increase will work in practice. Although responses to the consultation are still being considered, it is proposed that the changes will allow local authorities to apply different rates of discount or increase in different parts of their areas, or to increase council tax charges the longer a home has been empty.
Empty and unfurnished homes will continue to receive full exemption from council tax for the first six months, while councils will be able to offer a discount of between 10 and 50% for homes empty for a further six months. Currently, empty homes receive a 50% council tax discount between the sixth and 12th months.