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Out-Law News 2 min. read

Scottish Government proposes incentives for bringing empty property back into use


Businesses able to bring long-term empty shops or offices back into use could benefit from discounted business rates under new proposals from the Scottish Government.

Under the 'Fresh Start' scheme, announced by Local Government Minister Derek Mackay, 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. The scheme will be included as an amendment to the Unoccupied Properties Bill, which is currently before the Scottish Parliament.

Mackay said that the proposal would be an important addition to "the most competitive rates regime in the UK".

"I want to see local high streets across Scotland thriving and empty properties brought back into use across the country," he said. "By offering a fifty per cent discount to anyone bringing a shop or office that has been empty for twelve months or more back into use this scheme will help to bring businesses back to our high streets and give empty properties a fresh start."

The scheme would, he said, be of particular benefit to start-up companies who would be able to "utilise properties that were previously outwith their means". It would also provide support to existing businesses looking to expand into larger premises, he said.

The new relief is intended to begin from 1 April 2013. The Scottish Government has urged anybody interested in starting a business in an empty shop or office to contact their council from next year for more information.

Commercial property expert Karen Hunt of Pinsent Masons, the law firm behind Out-Law.com, said that the proposal was of potential benefit to both landlords and tenants.

"As this measure will reduce a tenant's year one outlays, it should encourage tenants to take leases even if they are on a short-term basis," she said. "A short-term letting would enable a tenant to assess the location and trading prospects, and could then lead on to a longer-term let."

The Unoccupied Properties Bill contains several provisions aimed at reforming the tax reliefs available to the owners of empty properties. If passed, the Bill will allow local authorities to cut business rates relief on certain commercial properties that have been left lying empty for more than three months. In addition, they will be able to double council tax charges on certain long-term empty homes after one year.

Announcing the changes in March, Mackay said that even after reform the reliefs available to owners of empty commercial properties in Scotland would remain "significantly more generous" than those in England. Vacant offices and shops in Scotland will have the current 50% relief cut to 10% after the property has been lying empty for three months, compared to no relief whatsoever on similar properties in England and Wales after the same time. Industrial properties and listed buildings will continue to receive 100% relief, while relief cuts off after six months in England and Wales.

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