There are some baffling quirks to the rate system and it is astonishing that Aberdeen’s hospitality sector is facing an increase in its rateable values, writes Derren McRae.
The UK rates system is not fit for purpose.
In a time when where there is rightfully considerable focus on sustainability, in the property sector – as a consequence of the rates system – we will continue to see commercial properties being demolished in 2023 to save on empty property rates.
It is astonishing to see sectors such as hospitality in the city facing increases in their rateable values.
In addition, the office and retail sectors have now changed for good, due to hybrid working and online shopping, negatively impacting on demand for traditional bricks and mortar commercial premises.
More needs to be done to encourage and incentivise companies who are prepared to go to the expense of taking on commercial premises.
‘Astonishing’ lack of support for hospitality firms
You also have some frankly baffling quirks to the system, such as empty property relief rules which lead to landlords and occupiers scrapping perfectly good office furniture, as they are penalised for leaving them in vacant properties if they don’t dispose of them.
Whilst it was encouraging to finally see a degree of downward adjustment in rateable values in some sectors in Aberdeen at the recent rates revaluation, it is astonishing to see sectors such as hospitality in the city facing increases in their rateable values.
It is also disappointing the Scottish Government decided not to follow English and Welsh counterparts by offering similar additional levels of relief, sadly making Scotland a less attractive place to open new businesses.
Derren McRae is head of Aberdeen office for property giant CBRE