MAJOR industry bodies have called for changes to rates relief on empty properties to be reversed, following a slump in Scottish industrial construction output.
New figures show activity in the private industrial sector fell to an 28-year low in the year to March 2016. Total output value of this sector was £253 million, down from £543 million during the previous year.
Until April this year, industrial properties received 100% relief from business rates as long as they were vacant. This now only applies for the first six months a property is vacant. After this period, empty industrial properties will receive just 10% relief.
The Scottish Building Federation and the Scottish Property Federation have highlighted the impact of these changes.
Vaughan Hart, Scottish Building Federation managing director said, “We’ve raised concerns for some time about an over-reliance by the Scottish construction industry on major infrastructure projects as the leading source of new work and output.
“These new figures suggest changes to rates relief are having a major impact on output from the private industrial sector of the industry which will only further exacerbate this problem.
“We fully support industry calls to reverse the new policy on rates relief so the industrial property market can recover, generating more new work for our members.”
David Melhuish, director of the Scottish Property Federation, added, “The recent figures for new construction orders for the industrial sector are a major concern.
“The consequence for the development sector of paying 90% rates soon after a building comes to market is that cash flow is hit, adding substantial risk for the investor and deterring projects or reducing their scale.
“This will reduce the amount of industrial space as older properties are demolished or withdrawn from the market putting more pressure on the space left in use to pay rates and to sustain or grow our business infrastructure.”