A decision to remove subsidies on empty historic buildings has been branded a “huge mistake” that could lead to “forced demolition” in Aberdeen.
Bosses of sports facilities in the Granite City have already said they will demolish the Beach Leisure Centre after Aberdeen City Council unveiled vast cuts to funding for a range of projects in order to fill a £46.6 million black hole in the city’s finances.
Perhaps few will cry for landlords of empty properties on Union Street or in the west end when libraries and music tuition for deprived children face being shut down.
However property professionals and business leaders have hit out at the council’s plan to remove business rates exemption for empty listed buildings, warning it will further discourage investment in historic buildings that desperately need it to prevent them falling into a further state of disrepair until demolition is the last resort.
Empty buildings scourge
Yet council co-leader Alex Nicoll believes the removal of the relief will help solve the scourge of absentee landlords, including large funds and investors who show little appetite for responding to the entreaties of local authorities, and nudge them to find tenants or buyers.
He said the move was part of a wider package, pointing to the city council’s action plan announced in the wake of a recent summit aimed at rejuvenating the city centre.
The plan includes a grant scheme of £500,000 as well as “fresh start” tax breaks offering eligible businesses 100% relief on their rates for up to the first year of trading.
Carrot and stick
The “carrot” of support is meant to fill vacant units left in the wake of the pandemic and amid the decline of in-person shopping, backed by the “stick” of removing reliefs.
Council figures show a total of 111 vacant units on Union Street and an additional 64 units on the upper floors.
More than 80% of this benefits from 100% empty property relief due to listed building status.
Mr Nicoll said: “Over the last five years we have seen a steady increase in the number of vacant buildings along Union Street.
“We have also seen that many of the building owners have taken full advantage of the rate relief discounts that have been available to them because many of them are listed buildings.
“This hasn’t always led to them being willing to engage with council officers to maintain the buildings but also to take necessary measures to find tenants to take over the leases.
“This is an opportunity to actually revitalise the city. We have a finite pot of money and have devoted considerable investment and resources, offering discounts where people are looking to provide accommodation and help for people looking to take over units on Union Street.
“But the owners of many of these buildings have a hugely important part to play and they cannot just sit on an asset waiting for all of us to do the hard work.”
Eric Shearer, head of office for international property giant Knight Frank in Aberdeen, fears the council’s move will lead to properties being abandoned and falling into disrepair.
And he said the Scottish Government had pulled off a “hospital pass” by passing the buck for empty property relief to local authorities from the start of next month.
According to the government, the move will deliver “greater fiscal empowerment”.
But Mr Shearer said decisions now being made to save money by doing away with business rate reliefs made councils “look like the bogey man”.
The owners of listed buildings, including many plush properties in Aberdeen’s prestigious west end, will be liable for 50% business rates for three months from the start of April.
They will then have to pay more as the empty property relief tapers down.
The “horrendous” shock, with only a few weeks’ notice, will heap further pressure on firms and could lead to a slump in listed building property values, Mr Shearer warned.
“This will create difficulties for a lot of businesses,” he said, adding that any with borrowings tied to their property could find their loan-to-value ratios taking a hit.
He continued: “This will push some people over the edge. It is frightening. Businesses that have been paying no rates will suddenly end up with a whacking bill.
“Listed buildings cost twice as much to refurbish. We will end up with abandoned buildings falling into disrepair. I have no doubt that is what is going to happen.”
Property firm DM Hall’s head of commercial for the north of Scotland, Stuart Johnston, was also against it.
On a LinkedIn post Mr Johnston said: “This is a huge mistake.
“Our city desperately needs new investment and this will only act to deflect the attention of investors elsewhere in Scotland.
“How long until the crippling vacant rates liabilities result in the forced demolition of
the very buildings we want to see put back into use with the ambition we have to restore our Granite Mile?”
Aberdeen and Grampian Chamber Commerce policy director Ryan Crighton said: “It is important to remember why relief is there in the first place – developers taking on listed buildings, for example, are unable to demolish, and have limited renovation options, yet are still burdened with statutory obligations to maintain the building.
“The shared view of the experts we have consulted with is that any sudden reduction in the rates relief offered for listed buildings will make ownership and redevelopment of some of our most historic buildings unattractive and unviable, leading to abandonment and further disrepair.
“We share these concerns and would have liked to have seen the council develop a deeper understanding of the potential impact this could have through a period of consultation.
“We must now see the local authority seriously invest and work with developers and investors to speed up and improve planning and building control processes to ensure long delays are not adding further cost and acting as a disincentive to bringing forward projects in Aberdeen.”
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