Non-Domestic Rates Empty Property Relief
North Ayrshire Council · 12 February 2025
Back to North Ayrshire Council — 12 February 2025 and its agenda
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NORTH AYRSHIRE COUNCIL 12 February 2025 North Ayrshire Council Title: Non-Domestic Rates Empty Property Relief Purpose: To seek approval of the revised policy for the provision of Empty Property Relief in relation to Non-Domestic Rates. Recommendation: That Council agrees to: (a) Note the feedback from the Budget Engagement in relation to Non-Domestic Rates detailed in Appendix 1; and (b) Approve the revised policy for the provision of Empty Property Relief in relation to Non-Domestic Rates from 1 July 2025 as detailed in Appendix 2. 1. Executive Summary 1.1 On 15 February 2023 North Ayrshire Council approved the adoption of the current Non-Domestic Rates Empty Property Relief policy for the administration of a discretionary local Empty Property Relief under section 3A of the Local Government (Financial Provisions etc.) (Scotland) Act 1962, as amended. This policy reflects the former mandatory Non-Domestic Rates relief policy developed by the Scottish Government. 1.2 The current policy provides little incentive for property owners to bring their properties back into use, with the resultant long term empty properties having negative impacts on residents and other neighbouring businesses. Under the policy 396 properties across North Ayrshire are receiving some element of Empty Property Relief, with 71 properties empty for more than 5 years. 1.3 The estimated cost of the current Empty Property Relief policy for 2025/26 is £1.285m. However, these costs are anticipated to increase over the year as new applications are received. 1.4 The proposed review of Non-Domestic Rates Empty Property Relief was included within the budget engagement exercise carried out during 2024. The feedback received is detailed at Appendix 1 and is broadly supportive of the objectives of the review. Consideration of the comments received has been reflected in the draft policy detailed in Appendix 2.
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1.5 The revised Empty Property Relief policy seeks to standardise the levels of Empty Property Relief available to property owners, reducing the levels and timeframes of relief available and encouraging owners to bring empty premises back into use. It is estimated that the introduction of the revised policy will reduce the costs of this relief by £0.253m during 2025/26, increasing to £0.326m per annum from 2026/27. 1.6 In order to support local businesses during the initial implementation of the revised policy and provide sufficient time for businesses to develop their properties back towards productive use, it is proposed that the new policy is implemented from 1 July 2025. 2. Background 2.1 Under the Non-Domestic Rating Contribution (Scotland) Regulations, local authorities act as agents of the Scottish Government in the collection and administration of Non- Domestic Rates within their respective areas. This includes the administration of several mandatory reliefs offered to reduce the rates burden in relation to a range of activities or conditions. 2.2 The Non-Domestic Rates (Scotland) Act 2020 repealed section 24 of the 1966 Act with effect from 1 April 2023, removing Empty Property Relief as a mandatory requirement. From that date, any local authority wishing to offer Empty Property Relief to businesses was required to adopt a local policy under the powers to award discretionary local reliefs contained in section 3A of the Local Government (Financial Provisions etc.) (Scotland) Act 1962, as amended. 2.3 The current Empty Property Relief policy was approved by North Ayrshire Council on 15 February 2023. In order to minimise the disruption to existing ratepayers and pending the completion of a public consultation and a review of the existing provisions, this policy reflected the former mandatory relief developed by the Scottish Government. 2.4 The cost of providing the current Empty Property Relief is included within General Revenue Grant funding received as part of the annual Local Government Finance Settlement. Total funding of £105m has been included within the Local Government Finance Settlement to meet the initial costs of local Empty Property Relief policies for 2025/26. Initial distribution has been based on the costs of the previous mandatory relief policy with North Ayrshire Council receiving a total allocation of £2.803m. Any unused element of this funding is included within the core General Revenue Grant and has been applied to support the Council’s General Services provision. Community Engagement Programme 2.5 During 2024, North Ayrshire Council undertook an extensive programme of engagement and consultation with our communities, seeking feedback on a wide range of budget areas. This included proposals for a review of the Non-Domestic Rates Empty Property Relief policy to ensure that the policy is fair to the property owners, recognises the circumstances around different types of property use and balances this against the need to bring properties back into economic use within a reasonable timeframe and mitigate the impact on communities from long periods of unoccupancy. It was also noted that this had the potential to generate further revenue
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for the Council which could be utilised to address the financial challenges and help protect vital Council services. 2.6 An excerpt from the main Budget Engagement feedback, highlighting the responses received in relation to the review of Empty Property Relief is attached at Appendix 1. The responses were broadly favourable and supported the position that a reduction in Empty Property Relief would help breathe new life into empty properties which were seen having a negative impact on our town centres. However, it was noted that relief would still be required in exceptional circumstances, such as death or insolvency. The proposed Policy has taken account of the comments received. Current Empty Property Relief Policy 2.7 The current policy is available to all eligible properties as follows: Empty Property Relief Empty properties are eligible for 50% relief from non-domestic rates for the first 3 months in which they are empty, follows by a maximum 10% discount thereafter. Empty industrial properties are eligible for 100% relief from non-domestic rates for the first 6 months in which they are empty, followed by a maximum 10% thereafter. In certain circumstances empty properties may receive 100% relief from non-domestic rates for the entire period during which they are empty, this includes: • listed buildings; • properties with rateable values under £1,700; • properties owned by a trustee for sequestration, liquidation or executors; • where the company who owns the property has been wound up; • where the property cannot by occupied by law; • properties subject to a compulsory purchase order; and • there are no buildings (empty ground). 2.8 While the number of empty properties can vary, the total value of Empty Property Relief awarded during 2023-24 was £1.646m and there are currently 396 properties across North Ayrshire receiving some element of Empty Property Relief. If these properties continue to be unoccupied into 2025/26, North Ayrshire Council will be required to identify a minimum budget provision of £1.285m with further provision required for the costs of any new applications for relief received throughout the year: Category No. of Properties Current Policy Value of EPR (£) Industrial Properties 37 100% for 6 months, 10% thereafter 22,485 Other Properties 139 50% for 3 months, 10% thereafter 74,182 Listed Buildings 47 100% unlimited 243,024 Low Value Properties (RV below £1,700) 73 100% unlimited 32,913 Death / Insolvency 23 100% unlimited 551,061
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Occupation Prohibited 23 100% unlimited 173,279 No Buildings - Land Only 54 100% unlimited 188,488 TOTAL 396 1,285,432 2.9 The current policy provides unlimited relief for certain categories of properties, with little or no incentive for the owners of these properties to bring them back into use. These empty properties can be a blight on communities and town centres and have negative impacts on residents and other neighbouring businesses. A review of the current properties highlights the potential long-term impacts of this policy with 13 properties sitting empty for more than 10 years and a further 58 empty for more than 5 years: Category Empty for more than 10 years Empty for between 5 and 10 years Empty for between 1 and 5 years Listed Buildings 5 6 30 Low Value Properties (RV below £1,700) 6 28 33 Death / Insolvency 2 2 14 Occupation Prohibited 0 2 20 No Buildings - Land Only 0 20 30 TOTAL 13 58 127 Revised Empty Property Relief Policy 2.10 Following a review of the current Empty Property Relief claimants, and taking account of the comments received during the Budget Engagement exercise, the revised Empty Property Relief policy, attached at Appendix 2, has been developed. 2.11 The proposed policy seeks to standardise the levels of Empty Property Relief available to property owners, reducing the levels of relief available and the timeframe over which it will be provided. This will encourage owners to bring empty premises back into use, supporting the core priorities of supporting local communities and businesses as detailed in the Council Plan 2023-2028, while continuing to support those owners facing exceptional challenges. The proposed changes to the policy are considered fair and proportionate when set within the context of the policy intent. In addition, the proposed Policy will release funding to address the financial challenges detailed in the Medium-Term Financial Outlook 2025/26 to 2027/28, helping to protect vital Council services. 2.12 In order to support local businesses and provide adequate notice to those impacted by the revised policy, it is proposed that the implementation is approved for 1 July 2025. This will provide a minimum notice period of 3 months and allow sufficient time for businesses to develop their own plans for either developing empty properties back towards productive use or marketing them as appropriate.
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2.13 The key elements of the revised policy are as follows: Category Current Policy Revised Policy Part Year Saving (£) Full Year Saving (£) Industrial Properties 100% for 6 months, 10% thereafter 50% for 3 months, 10% for 9 months -15,503 -20,926 Other Properties 50% for 3 months, 10% thereafter 50% for 3 months, 10% for 9 months -38,679 -51,837 Listed Buildings 100% unlimited 50% for 3 months, 10% for 9 months -176,292 -235,056 Low Value Properties (RV below £1,700) 100% unlimited 50% for 3 months, 10% for 9 months -22,369 -29,825 Death / Insolvency 100% unlimited 100% unlimited 0 0 Occupation Prohibited 100% unlimited 100% unlimited 0 0 No Buildings - Land Only 100% unlimited 100% unlimited 0 0 TOTAL -252,843 -337,644 3. Proposals 3.1 It is proposed that Council agrees to: (a) Note the feedback from the Budget Engagement in relation to Non-Domestic Rates detailed in Appendix 1; and (b) Approve the revised policy for the provision of Empty Property Relief in relation to Non-Domestic Rates from 1 July 2025 as detailed in Appendix 2. 4. Implications/Socio-economic Duty Financial 4.1 It is estimated that the adoption of revised policy will reduce annual costs by £0.338m, reduced to £0.253m for 2025/26 during the transition phase. There is no impact on anticipated funding levels and the full amount of the reduced costs will be applied to address the financial challenges identified within the Medium-Term Financial Outlook 2025/26 to 2027/28. Human Resources 4.2 None – implementation of the revised policy will be achieved within existing Revenues Service resources.
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Legal 4.3 The Council will exercise its powers under Section 3A to the Local Government (Financial Provisions etc.) (Scotland) Act 1962 and the Non-Domestic Rates (Miscellaneous Anti-Avoidance Measures) (Scotland) Regulations 2023. Equality/Socio-economic 4.4 The exercising of the powers under the regulations does not have any negative impacts on service users, employees, protected groups or the wider community. An Equalities and Children's Rights impact assessment screening has been undertaken. Environmental and Sustainability 4.5 None. Key Priorities 4.6 This report directly supports the Council Plan 2023 to 2028 through the promotion of behavioural change to encourage owners to bring empty premises back into use, mitigating the negative impact of empty properties within our communities and supporting local communities and businesses. Community Wealth Building 4.7 None. 5. Consultation 5.1 The issues within this policy were included within the detailed community engagement undertaken during 2024 across citizens, community and stakeholder groups. Additional consultation has taken place with the Council’s Legal Services team. Mark Boyd Head of Service (Finance) For further information please contact David Forbes, Senior Manager (Strategic Business Partner), on 01294 324551. Background Papers Non-Domestic Rates Empty Property Relief – Council 15 February 2023 Medium Term Financial Outlook 2025/26 to 2027/28 – Council 9 October 2024
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Appendix 1 Excerpt from the 2025 to 2026 Budget Engagement Findings Taxes and Levies Survey Responses: Review of Non-Domestic Rates 8. Have you any additional comments you wish to make on the review of Non- Domestic Rates – Empty Property Reliefs and on how you think people will be impacted? SUMMARY: - Breathing new life into empty properties: Generally, there was broad support for this measure with many comments emphasising the need to discourage property owners from leaving properties vacant, and ensuring owners are accountable for maintaining or selling vacant buildings. - Community impact: Concern was expressed about the number of empty properties, particularly in town centres across North Ayrshire, which lead to negative perceptions of the towns and villages. A significant number of responses indicate that they believe that removing empty property relief could improve the appearance and vitality of town centres and attract new businesses or residents. - Exceptions for special circumstances: Several comments highlight the need for flexibility in implementing the policy, particularly in cases of probate, inheritance, or ongoing renovations. It was suggested by a number of respondents that exceptions could be made where properties are empty due to unavoidable circumstances like death, illness, or renovations that require time to complete. ‘Increasing the rates could encourage absent landlords to sell their properties for redevelopment or redevelop them themselves which in turn will support town regeneration’
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‘I don't think there should be any relief as people and communities have to watch buildings become derelict and unsuitable for anyone to use they are an eyesore to the look of a community’ ‘Removing empty property relief should encourage landlords to re-let property more quickly and could reduce rental levels. The relief subsidises landlords wishing to "hold out" for a higher rent.’ ‘I think this is another good proposal. There are so many empty properties which are being let go to rack and ruin so people should not be rewarded at all for having a poorly kept property. If you have a property you do not want to care for, you should not get any advantage from this. Removing rates relief might encourage people to sell unwanted buildings and this could benefit the community with new residents or new businesses as well as improving its appearance.’ ‘Something needs to be done to encourage owners of empty property or land to do something with it. Giving them exemption from rates is not the answer and this proposal might actually help encourage some action. Unless in death I think this is a very good idea. There are too many empty buildings owned by people doing nothing about them and getting away with not making payment’ ‘Relief should be available in the case of a death.’ ‘It is exceptionally difficult to set up a new business on Arran at the moment due to the lack of housing for workers and the ferry crisis which has reduced visitor numbers. Therefore some properties may be empty because a buyer can't be found. Island problems differ from the mainland so there is a need for island proof policy.’ ‘I think a reduction in the availability of empty property reliefs would help to bring vacant properties back into use and have a positive impact on the visual amenity of the area. Too many properties are 'land banked', especially at key locations’ ‘Relief for empty properties is essential if work is being done and the building/ house cannot be occupied. In this day and age getting tradesmen is difficult and they can be booked up for months in advance so time needs to be available to allows homeowners to make the improvements otherwise building will just fall in to disrepair.’ ‘I believe this proposal will have a high impact on my community, particularly in terms of empty properties and their potential to be brought back into use. There are several vacant commercial and industrial properties in the area that are currently benefiting from 100% relief, especially those with listed building status. While I understand the need for fairness and the unique circumstances of property owners, extending 100% relief indefinitely may discourage property owners from seeking tenants or redeveloping these spaces. This results in long-term blight and missed opportunities for revitalising our local economy.’
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9. Do you think the proposal will have a particular impact on any of the groups below?
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Appendix 2 North Ayrshire Council Non-Domestic Rates Discretionary Empty Property Relief 2025-26 1. Background 1.1 Following changes to the legislation governing the administration of Non-Domestic Rates, Empty Property Relief ceased to be a mandatory relief from 1 April 2023. Section 140 of the Community Empowerment (Scotland) Act 2015 added Section 3A to the Local Government (Financial Provisions etc.) (Scotland) Act 1962, permitting local authorities to introduce a scheme to reduce or remit any rate leviable by it. 2. Definition of an Empty Property 2.1 For the purposes of awarding relief, the following criteria must be met before a property is considered to be unoccupied: • There should be no physical occupation by any person, for any purpose; • The premises must not be open or available to the public; • Plant, machinery and other fixtures and fittings can be kept on property without that being classed as occupation. However, there should be no stock left on the premises, except where these items have been abandoned by a tenant and the claim for relief is submitted by the landlord. 3. Empty Property Relief 3.1 The undernoted discretionary reliefs will be applied to all properties from 1 April 2025: 3.1.1 All Properties other than those noted at 3.1.2: 50% Empty Property Relief : For a maximum of 3 months from the date when the property became vacant. 10% Empty Property Relief : For a maximum of a further 9 months following the end of the initial 3 month period Reliefs are based on a percentage of the rate that would apply if the premises were occupied.
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Appendix 2 3.1.2 Other Properties: 100% Empty Property Relief will be awarded to the following types of properties: • Occupation Prohibited by Law • Under compulsory purchase order; • Unoccupied due to death or insolvency; • Properties not comprising one or more buildings or part of a building. All awards of 100% Empty Property Relief will be subject to annual review 3.2 Additional criteria / definitions: • A change of ratepayer does not affect the qualifying time period, relief applies from the last occupation date; • Applications for Occupation Prohibited by Law must be supported by evidence. This may include: o written confirmation that the property is unfit for occupation from either North Ayrshire Council’s building control or environmental health sections; or o written confirmation from Police Scotland or the Scottish Fire and Rescue Service in the event the property does not meet regulation standards or in the case of fire damage; • A property must be occupied for at least 6 months before any new period of empty relief can be considered, (any period of occupancy of less than 6 months will be disregarded as if it had not happened in terms of relief available); • Where a property was last occupied and was awarded an exemption due to being a registered charity, as detailed in Regulation 4 of the Local Government (Financial Provisions etc.) (Scotland) Act 1962, no further exemption may be awarded for the empty period. 4.0 Applications Process 4.1 All applications for Empty Property Relief must be made using the appropriate form available at https://www.north-ayrshire.gov.uk/business-licensing/business- rates/business-non-domestic-rates-relief 5.0 Backdating 5.1 An application for relief can be awarded from the start of the financial year in which the application is made provided the organisation satisfied the requirements at that time. Any applications for the previous financial year may be considered provided sufficient evidence is submitted in support of the application. Consideration may also be given where an organisation has been rated retrospectively either through the actions of North Ayrshire Council or the Assessor. Any award for a previous financial year will be conditional on any outstanding charges or fees incurred by the rate payer being paid. Awards for previous financial years will be considered on the basis of the policy which was in place during the relevant period.
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Appendix 2 6.0 Subsidy Control 6.1 The Council must consider and comply with the Subsidy Control Act 2022 in relation to the local reliefs and reductions it provides under this policy. Where an applicant for empty property rates relief is involved in commercial activity, the Council will have to consider whether an award of relief would result in the level of financial assistance received by that applicant in the applicable period, as set out in Section 36 of the Act, exceeding the permitted level of Minimal Financial Assistance as set out in the Act, and may reduce the amount of relief awarded in terms of this policy if the Minimum Financial Assistance limit would be exceeded. The requirement to make applicants aware of this is reflected within the application and award processes. However, Empty Property Relief is regarded as a general measure and is, therefore, unlikely to require to be awarded as Minimum Financial Assistance. 7.0 Minimising Tax Evasion 7.1 The Non-Domestic Rates (Miscellaneous Anti-Avoidance Measures) (Scotland) Regulations 2023 introduces new measures to minimise tax evasion through contrivance. Where Non-Domestic Rates Empty Property relief has ceased to be available in respect of any lands and heritages, any subsequent application for relief by the same owner, or a person or body that has entered into a tenancy arrangement with that owner in relation to those lands and heritages, must demonstrate to the local authority that the making of the application is not part of an artificial non-domestic rates avoidance arrangement within the meaning of sections 39 and 40 of the Non- Domestic Rates (Scotland) Act 2020. Where the person or body fails to demonstrate these matters to the satisfaction of the local authority, no relief shall be awarded. 8.0 Appeals 8.1 As this is a discretionary power, there is no formal appeal process against the Council’s decision. However, applicants who disagree with a decision in relation to the Empty Property Relief policy have a right to request a review. All requests for review can be submitted in writing to the Head of Finance, whose decision will be final.