Scotland’s real estate sector sees opportunities in the Programme for Government

11 Sep 2017

David Melhuish, SPF Director

After 10 years of SNP Government it was widely expected that the First Minister would seek to refresh her agenda to meet the challenges of the new political environment that we all find ourselves in.  Whilst Scotland’s real estate sector wasn’t specifically mentioned in the First Minister’s remarks, there were a number of areas which will impact on the industry.

Before coming to the specific bills mentioned, the elephant in the room remains the possibility of a second Scottish independence referendum in the wake of ongoing Brexit negotiations.  In the event there was no reference to another referendum on Scottish independence.  Whilst I appreciate there are diverse views on this highly divisive topic, the real estate sector has been keen to press the need for a level of political stability to allow our industry to continue doing what it does best – attracting and using capital to create fantastic places to live, work and enjoy.

Turning to the Bills themselves, a staple of any Programme for Government is its Budget Bill and like any other trade organisation we’ll continue to make representations to Government about a number of proposals such as LBTT and business rates, topics which have a profound impact on our members and the industry.  We will also continue to press for the Scottish Government to create the right conditions to attract much-needed investment into the economy and important infrastructure projects.

On the LBTT Bill for example, whilst a technical bill, it is welcome and follows up on earlier secondary legislation required to deal with unforeseen circumstances incurring Additional Dwellings Supplement (ADS) charges. Making the Order retrospective will mean that a repayment of ADS can be claimed by taxpayers who meet the relevant criteria in respect of transactions, which occurred prior to the effective date.  However, we feel the Bill is narrowly drawn and would benefit from catching up with other anomalies in the LBTT system, in relation to technical non-residential matters covering group relief and share pledges.  More broadly, the need for this primary legislation underlines the need for a better means of introducing technical taxation measures into Holyrood, without taking up disproportionate legislative time. Our wider view on residential rates and thresholds remains that the 10% rate should begin at £500,000 – not the current relatively low level of £325,000.

It has long been trailed that the Government would be bringing forward a Planning Bill and the First Minister confirmed this in her remarks.  Whilst we await the final details of the proposals, the SPF has been particularly active in Government-led working groups on planning reform and will be arguing strongly for a planning system which is robust and delivers for both developers and also local communities who rely on our industry to deliver jobs, investment and homes. This should offer the opportunity of greatly improved infrastructure delivery that will unlock development while at the same time retaining the viability of development projects. 

Whilst no specific bill on this issue was mentioned, the First Minister hinted that the Government would be responding swiftly to the proposals in the Barclay Review on Business Rates.  Indeed, so swift is the response that Derek Mackay is to make a statement to Parliament on Tuesday 12 September outlining the Government’s response to the Review. The programme itself included several recommendations the Government would bring forward, including yearly revaluations, expansion of the fresh start relief scheme, a review of plant & machinery rates and an introduction of a nursery rate relief scheme. 

From a real estate perspective, there is some reason for optimism. A one-year rates relief for new build properties will help developers build much needed new offices or enhance existing stock.  Also, proposals to carry out more regular revaluations are important to ensure a closer relationship between the market and rates.  On the negative side, we are urging the Government to carefully consider the impact of ending rates relief for the redevelopment of listed buildings and the proposal to add further tax burdens on empty property vacant for five or more years.