Empty Property Relief in Scotland: Impact and Opportunities

Empty Property Relief in Scotland: Impact and Opportunities

From 1 April 2024, significant changes were implemented in relation to the Empty Property Relief (EPR) policy in Scotland. These changes affect how local councils manage non-domestic rates for unoccupied properties, with each local authority having full autonomy in setting the non-domestic rates available to empty premises.

The majority of local authorities – including Edinburgh City Council, Dundee City Council, and Perth and Kinross Council – have made significant changes to this relief, which will have an impact on many property owners, landlord and tenants throughout Scotland. It is, therefore, extremely important to check with your own local authority policy in relation to Empty Property Relief.

The purpose of the change has been implemented in an effort to promote the occupancy of empty properties and to encourage growth in the non-domestic property market across Scotland. It is hoped that landlords/property owners will be incentivised to seek new tenants for empty properties more quickly than previously.

One special category of property where there is a significant change to the EPR is in relation to Listed Buildings.

Historically, Listed Buildings were exempt from paying business rates when unoccupied and the relief applied without limit of time and for as long as the premises were unoccupied. The reasoning behind this exemption being that generally there are higher costs associated with maintaining Listed Buildings and stricter constraints on what can and can’t be done to a Listed Building in Scotland.

The relief was given on the basis that owners of Listed Buildings were typically required to ensure the property was maintained in a good state of repair and so allowing the property to deteriorate could have an impact of the relief. The changes appear to be with the intention of balancing the need to preserve Scotland’s historic properties with the economic need to promote occupancy of empty properties and encourage growth in the non-domestic property market across Scotland.

As an example, Dundee City Council has implemented its policy whereby all empty properties will receive 100% relief for six months. After this period, a full charge will be applied unless the property is reoccupied for at least three months before becoming eligible for relief again​ (with strict guidelines in place here that require to be satisfied if the extension is to be claimed). This change applies across the board with no differentiation between a Listed Building and other non-domestic properties.

While it is clear that the intention of these changes is to encourage use and occupation of empty non-domestic properties, the changes will have a considerable effect, especially in relation to Listed Buildings by adding additional financial burden onto a sector already under increased pressure. The potential here is that this could lead retailers and developers to move away from the city centres to avoid the potential financial burden associated with empty properties.

The changes, however, could provide advantages for tenants, with Landlords potentially agreeing to better lease terms to avoid a unit remaining empty and the Landlord becoming liable for the rates themselves and so encouraging people back into our city centres.