Knight Frank has warned that the changes to the non-domestic rates system in Scotland could cause confusion for landlords and property investors.

The new rules, which are part of the recent settlement between the Scottish government and local authorities, devolve empty property relief to councils from 1 April, allowing them to set their own rules and conditions for exemption.

Currently, vacant industrial properties are given 100% relief for the first six months, followed by 10%, but some local authorities are proposing changes and the reliefs will be reviewed annually.

For instance, according to Knight Frank, Aberdeen City Council is proposing that vacant industrial properties will receive 50% relief on rates for three months, followed by 10%, while neighbouring Aberdeenshire Council will maintain the current regime. This, said the agency, would result in different systems only a few miles apart.

Scott Hogan, head of Scotland industrial and logistics at Knight Frank, commented: “The new rules mean that local authorities can, and likely will, have different reliefs across Scotland, creating an uneven playing field. This will introduce an added degree of complexity for landlords and investors, and will almost certainly create confusion for anyone with property interests in multiple council areas.

“Councils are under pressure to collect more income and, understandably, reducing rates relief may seem like a simple way of bringing in more money. However, I am yet to encounter a landlord who does not want to let their property, so it will be especially punitive to those who are already struggling to secure occupiers and will add risk for any new investors looking at Scotland.

“The changes mean that landlords need to seriously consider how they manage their properties 12 months ahead of any lease expiry to ensure that void periods are kept to a minimum. This includes early engagement on dilapidations – a process that can take months to conclude in itself – and re-marketing of properties at least six months ahead of a possible vacancy.”