8 - NDR - Empty Properties Operational Policy
Renfrewshire Council · 9 February 2023
Back to Finance, Resources and Customer Services Policy Board — 9 February 2023 and its agenda
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___________________________________________________________________ To: Finance and Resources Policy Board On: 9 February 2023 ___________________________________________________________________ Report by: Director of Finance and Resources ___________________________________________________________________ Heading: Non-domestic rates – empty properties operational policy ___________________________________________________________________ 1. Summary 1.1 Empty Property Relief was mandatory and fully funded by the Scottish Government through the Local Government Settlement. 1.2 During 2019/20 budget discussions, the Scottish Government committed to the devolution of empty property relief on 1 April 2023. 1.3 Local authorities have powers contained in section 3A of the Local Government (Financial Provisions etc.) (Scotland) Act 1962 to award discretionary local reliefs. 1.4 Such reliefs are funded by councils and could be used to offer relief in full or in part for empty properties from 1 April 2023. Local Government Revenue Funding for 2023/24 will be adjusted reflect the devolution of Empty Property Relief. 1.5 The purpose of this report is to present for approval a proposed policy setting out the Council’s position in relation to Empty Property Relief for non-domestic properties, which amends the 100% relief for unoccupied Listed Buildings currently available. 2. Recommendations 2.1 It is recommended that members of the Board Note the contents of the report; and
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Approve the Non-Domestic Rates – Empty Properties Operational Policy attached at Appendix 1. 3. Background 3.1 Empty Property Relief was mandatory and fully funded by the Scottish Government through the Local Government Settlement. As part of 2019/20 budget discussions the Scottish Government committed to the devolution of empty property relief on 1 April 2023. Empty Property Relief (EPR) provides certain rates relief on unoccupied non- domestic properties. Unoccupied industrial property is eligible for 100% relief for the first six months since becoming unoccupied, and 10% thereafter. Other (non-industrial) unoccupied property is eligible for 50% relief for the first three months since becoming unoccupied, and 10% thereafter. 100% relief is provided indefinitely for unoccupied properties which meet any of the following: listed building rateable value is under £1,700 owned by a trustee for sequestration, liquidation, or executors cannot be occupied by law under a compulsory purchase order the property has no buildings the owner is in administration (or subject to an administration order) the owner is a company or partnership being wound up A summary of Unoccupied Properties in Renfrewshire is attached as Appendix 2 which outlines the position at 4 October 2022. 3.2 Local authorities currently have powers contained in section 3A of the Local Government (Financial Provisions etc.) (Scotland) Act 1962 to award discretionary local reliefs. Such reliefs are funded by Councils and could be used to offer relief in full or in part for empty properties from April 2023. 3.3 On 15 December 2022, the Council approved the addition to the terms of reference of the Finance, Resources and Customer Service Policy Board as follows: To determine the operation and policies of any locally determined non- domestic rates schemes or reliefs in line with relevant legislation; and
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To determine the operation and policies of any locally determined council tax schemes, discounts, or reductions in line with relevant legislation. 3.4 It was intended that the devolution of this relief delivers greater fiscal empowerment, enabling councils to administer any support for unoccupied properties in a way that is tailored to local needs. 3.5 The Scottish Government, in line with the independent Barclay Review of non- domestic rates, supports measures that help bring empty property back into economic use. 3.6 Supporting the premise that the devolution of empty property relief could be used as a vehicle to bring properties back into economic use, this was a power previously sought by the Council during the Barclay Review period. 4 Non Domestic Rates – Empty Properties Operational Policy 4.1 The purpose of the Empty Properties Operational Policy is to specify that Officers will operate the legislation detailed in section 3.2 above, aligned with the Council approvals detailed in section 3.3. 4.2 The policy maintains the position that Unoccupied industrial property is eligible for 100% relief for the first six months since becoming unoccupied, and 10% thereafter and that Other (non-industrial) unoccupied property is eligible for 50% relief for the first three months since becoming unoccupied, and 10% thereafter. 4.3 The Policy retains 100% relief for all unoccupied properties listed in section 3.1 above except for Listed Buildings. 4.4 One of the main objectives of the Policy is to provide a supporting measure to help bring empty properties back into economic use. 4.5 With effect from 1 April 2023, Unoccupied Listed Buildings are eligible for 50% relief for the first three months since becoming unoccupied and 10% thereafter, the same as properties in the category Other (non-industrial) unoccupied; or 100% relief for 6 months and 10% thereafter if the property is classed as unoccupied industrial. 4.6 The policy will result in a charge for unoccupied properties which are classed as listed buildings. For context, per the data presented in Appendix 2, as at 4 October 2022, this policy change would affect charges on 145 properties.
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4.7 To allow businesses time to prepare for this change A transitional period will commence from 1 April 2023 for Listed Buildings who will continue have 100% relief on that date for a period of 6 months after which time they will be eligible for 10% relief. 4.8 An Equality Impact Assessment has been carried out (attached as Appendix 3) in line with the Council’s approach and no issues have been identified that require mitigating actions. The Equality Impact Assessment will be reviewed as data becomes available following introduction of the changes. _________________________________________________________________ Implications of the Report 1. Financial – From 2023/24, funding related to the devolution of empty property relief will be incorporated into the local government settlement and distributed to Council based on historic levels of relief awarded in each respective council area. The proposals in the report will generate a financial benefit to the Council, however there is a risk that in future the level of grant from Scottish Government related to EPR will be amended to reflect local policy decisions 2. HR & Organisational Development - None arising directly from this report. 3. Community Planning – None arising directly from this report. 4. Community Care, Health & Well-being – None arising directly from this report. 5. Legal – None arising directly from this report. 6. Property/Assets – None arising directly from this report. 7. Information Technology – None arising directly from this report. 8. Equality & Human Rights- The recommendations contained within this report have been assessed in relation to their impact on equalities and human rights. No negative impacts on equality groups or potential for infringement of individuals’ human rights have been identified arising from the recommendations contained in the report. If required, following implementation, the actual impact of the recommendations and the mitigating actions will be reviewed and monitored, and the results of the assessment will be published on the Council’s website 9. Health & Safety – None arising directly from this report.
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10. Procurement - None arising directly from this report. 11. Risk – None arising directly from this report. 12. Privacy Impact - None arising directly from this report. _________________________________________________________ Author: Emma Shields – Senior Service Delivery Manager (Financial Operations)
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APPENDIX 1 RENFREWSHIRE COUNCIL FINANCE & RESOURCES NON-DOMESTIC RATES – EMPTY PROPERTIES OPERATIONAL POLICY 1. Background 1.1. Empty Property Relief 1.1.1. Prior to 1 April 2023, Empty Property Relief was mandatory and fully funded by the Scottish Government through the Local Government Settlement. 1.1.2. During 2019/20 budget discussions, the Scottish Government committed to the devolution of empty property relief on 1 April 2023. 1.1.3. Empty Property Relief (EPR) provides certain rates relief on unoccupied non-domestic properties. 1.1.4. Unoccupied industrial property is eligible for 100% relief for the first six months since becoming unoccupied, and 10% thereafter. 1.1.5. Other (non-industrial) unoccupied property is eligible for 50% relief for the first three months since becoming unoccupied and 10% thereafter. 1.1.6. 100% relief is provided indefinitely for unoccupied properties which meet any of the following criteria: • listed building • rateable value is under £1,700 • owned by a trustee for sequestration, liquidation or executors • cannot be occupied by law • under a compulsory purchase order • the property has no buildings i.e., it comprises of empty land • the owner is in administration (or subject to an administration order) • the owner is a company or partnership being wound up 1.1.7. All empty property relief awards made under previous legislation ended on 31 March 2023, prompting the need for a local policy.
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APPENDIX 1 1.2. Devolution of Empty Property Relief 1.2.1. Local authorities have powers contained in section 3A of the Local Government (Financial Provisions etc.) (Scotland) Act 1962 to award discretionary local reliefs. Such reliefs are funded by councils and could be used to offer relief in full or in part for empty properties from April 2023. 1.2.2. On 15 December 2022 the Council approved the addition to the terms of reference of the Finance, Resources and Customer Service Policy Board as follows: To determine the operation and policies of any locally determined non-domestic rates schemes or reliefs in line with relevant legislation To determine the operation and policies of any locally determined Council Tax schemes, discounts, or reductions in line with relevant legislation; and 2. Policy Purpose & Objectives 2.1. Purpose: 2.1.1. The purpose of this policy is to: Specify the Council’s position in relation to the awarding of relief for empty non-domestic properties Detail the appropriate reliefs applicable for all categories of empty non-domestic properties. Provide a supporting measure to help bring empty properties back into economic use 2.2. Policy Objectives 2.2.1. The objectives of this policy are to: To allow property owners a window to achieve reoccupation of property without the burden of a full Non-Domestic Rates charge on a property which has become unoccupied.
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APPENDIX 1 Offer an (immediate) incentive for owners of empty non-domestic properties to invest in / dispose of / consider the building’s future recurring financial liabilities for them as an owner. Minimise to an optimum level the number of derelict non-domestic properties in Renfrewshire. Generate additional economic activity in Renfrewshire by incentivising the marketing of properties to attract at rental charge which as a minimum covers the non-domestic rates charge 2.3. Policy Risks Owners may seek to demolish their property or render it unoccupiable as a result of not being willing / able to pay NDR. Any future increase in the value of reliefs awarded may exceed government funding, although this will be partly mitigated by the removal of indefinite listed building relief. Additionally, any risk of shortfall would also increase where the level of grant from Scottish Government related to Empty Property Relief is amended to reflect local policy decisions. 3. Empty Property Relief – Unoccupied Properties 3.1. Awarding non-indefinite relief 3.1.1. Unoccupied industrial property is eligible for 100% relief for the first six months since becoming unoccupied, and 10% thereafter. 3.1.2. Other (non-industrial) unoccupied property is eligible for 50% relief for the first three months since becoming unoccupied and 10% thereafter. 3.1.3. Any property part way through a non-indefinite period of relief as at 1 April 2023, awarded under the previous legislative framework, will continue to receive the relief awarded until the appropriate end date is reached i.e., six months for an industrial property and three months for other properties.
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APPENDIX 1 For example, a non-industrial property becomes empty on 1 March 2023 under the previous legislative position meaning that 50% relief would have been awarded for the period 1 March 2023 to 31 May 2023. Without this Policy that relief would terminate on 31 March 2023. 3.2. Awarding indefinite 100 % Relief 3.2.1. 100% relief is provided indefinitely for unoccupied properties which meet any of the following criteria: • rateable value is under £1,700 • owned by a trustee for sequestration, liquidation or executors • cannot be occupied by law • under a compulsory purchase order • the property has no buildings i.e., it comprises of empty land • the owner is in administration (or subject to an administration order) • the owner is a company or partnership being wound up 3.3. Unoccupied Properties classed as Listed Buildings 3.3.1. With effect from 1 April 2023, Unoccupied Listed Buildings are eligible for 50% relief for the first three months since becoming unoccupied and 10% thereafter, the same as properties in the category Other (non- industrial) unoccupied; or 100% relief for 6 months and 10% thereafter if the property is classed as unoccupied industrial. 3.3.2. A transitional period will commence from 1 April 2023 for Listed Buildings which will continue have 100% relief on that date for a period of 6 months after which time they will be eligible for 10% relief. Listed buildings which become unoccupied on or after 1 April 2023 will be eligible for relief detailed in section 3.1 above. 4. Dispute Process 4.1. Appeals 4.1.1. An appeal can be made on the grounds that the rates charged have been incorrectly calculated. All appeals must be made within 28 days of the date on the notice by writing to the Director of Finance & Resource.
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APPENDIX 1 4.1.2. Where an appeal is received and is wholly in relation to the award of relief for an unoccupied property, a Senior Officer will review the case and respond to the appellant to explain that reliefs are non-legislative and that a local policy is in place. 4.1.3. If the appellant wishes to progress the appeal thereafter, a senior officer will make a submission to the NDR Appeal Panel however will ask for the appeal to be struck out as the change in liability is wholly in relation level of relief awarded for an empty non-domestic property. 4.2. Complaints 4.2.1. Any complaints received concerning this policy will be logged, investigated and responded to in accordance with the Council’s Complaints Handling Procedure. 5. Debt Recovery Action 5.1.1. The Council’s normal recovery action will be taken, where appropriate.
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Appendix 2 Empty Property Relief Awards for 2022/23 as at 04/12/2022 Relief Type 2022/23 Count of Awards 10% Empty Property Relief1 293 10% Industrial Empty Relief2 8 100% Compulsory Purchase Order3 11 100% Empty Land, No Buildings4 3 100% Industrial Property5 26 100% Insolvency6 24 100% Listed Building7 145 100% Occupation Prohibited By Law8 15 100% Rateable RV Less Than Limit9 273 100% Ratepayer Deceased10 2 50% Empty Property Relief11 70 Totals 870 1 Non‐Industrial properties where 10% relief is being awarded following on from 3 months relief at 50% 2 Industrial properties where 10% relief is being awarded following on from 6 months relief at 100% 3 Indefinite 100% relief being awarded for empty properties which are subject to compulsory purchase orders 4 Indefinite 100% relief being awarded for land without buildings 5 Industrial properties where 100% relief is being awarded for a maximum of 6 months following the property becoming empty 6 Indefinite 100% relief being awarded for empty properties where the party liable for rates is insolvent 7 Indefinite 100% relief being awarded for empty properties which are listed buildings or ancient monuments as defined by Historic Environment Scotland 8 Indefinite 100% relief being awarded for empty properties for which occupation is prohibited by law 9 Indefinite 100% relief being awarded for empty properties which have rateable values of under £1700 10 Indefinite 100% relief being awarded for an empty property which is in the possession of the executor of a deceased person’s estate. The relief is only applicable to the period following death 11 Non‐Industrial properties where 50% relief is being awarded for a maximum of 3 months following the property becoming empty
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Equality & Human Rights Impact Assessment Record This documentation should be filled in on an ongoing basis as your piece of work develops. Please see pages 7-9 of the guidance for help in completing this record. Please complete this form electronically, so you can expand the boxes as needed. Basic Information Currently empty commercial properties are charged reduced levels of business rates. The reduction awarded on each property’s rates charge is governed by legislation put in place by Scottish Government, and from 01/04/23 responsibility for all empty property reliefs will be devolved to councils. Contact Details Name of person leading this work Emma Shields Job title of person leading this work Senior Service Delivery Manager (Financial Operations) Email of person leading this work emma.shields@renfrewshire.gov.uk Name of Head of Service who will sign off the process Christine McCourt Background Information The general rules for empty relief lead to customers receiving 3 months at 50% relief followed by indefinite relief of 10%, but there are also various categories of 100% relief awarded. Renfrewshire Council plans to retain every category of relief at the current level, with the exception of listed building relief. An empty listed building currently receives indefinite 100% relief. This would be removed and customers in that category will instead drop on to the standard reliefs of 3 months at 50% relief followed by indefinite relief of 10% or, in the case of empty Industrial properties, 6 months at 100% relief followed by indefinite relief of 10%. This will bring policy for empty listed buildings in line with non-listed empty buildings. Some assessment has been carried out of the current owners of empty properties and no equality specific implications have been identified, although detailed equality information is not available so there are limitations to this exercise. It is not anticipated that the proposed policy will have any adverse impacts on protected characteristics, or that any adjustments will be required to the proposal as a result of equality impacts. It is further noted that the policy intention is to reduce the number of vacant and derelict commercial properties in the local area, and so it is anticipated that this approach may have a positive impact for local communities by improving the appearance and perception of the area. Based on this, it is not anticipated that full Equality Impact Assessment is required at this time.
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Monitoring The policy will be monitored to assess whether unintended consequences occur for any protected characteristics. Sign Off