Many of the property-owners that ‘protect’ the country’s building heritage look set to be penalised, under the latest changes to the rating system. Through these changes, the Scottish Government is passing autonomy on rates relief to each local Council and many cash strapped Councils have already decided to remove relief on historic buildings, due to funding restrictions which they say are imposed by the Scottish Government.
Historically Listed Buildings were exempt from business rates when vacant. The purpose of this relief was to act as a contribution towards the high holding costs of vacant listed buildings due to higher insurance, maintenance and utility costs, as these buildings must be heated and secure when empty.
The potential uses of historic buildings are often limited to office or residential and when those markets are ‘quiet’ many buildings remain vacant for long periods. Given the nature and complexity of these buildings, there can also be significant planning delays for changes of use, which can further extend the period of vacancy.
Interestingly many local authorities will also suffer increased rates liabilities through these changes. As they are responsible for historic buildings, including Council Chambers, museums, art galleries and traditional offices, and the option to save funds by vacating such buildings will be removed as local authorities are liable for business rates on their own estate.
This change will happen as from 1 April 2024 providing owners little time to budget for a significant increase in outgoings, where even an average townhouse building could see a sudden new rates liability of between £35,000- £50,000. A sum which could have been spent on the building fabric.
There has been very limited notification on this change with the heavy sound of the rates invoice on the mat being the first communication many historic property owners will receive.