Aberdeen commercial property and land owners face some of the highest tax bills in Scotland after councillors approved a £9million levy on vacant buildings.
Plans to impose a 10% council tax rise were scaled back to 5% as the ruling SNP-Liberal Democrat administration on Aberdeen City Council prioritised cost-of living support in its 2023/24 budget.
There will be over £200million of investment in new schools - but pools and gyms have been left facing closure by a substantial cut to funding for Sport Aberdeen.
And there are fears that listed buildings could be left to decay or even be abandoned after the administration passed radical reforms to business rates in the city.
Rates reform
Up until now, vacant commercial premises which are listed in Scotland have received 100% relief on non-domestic rates, due to the limitations and burden of owning and maintaining such properties. Various other reliefs also apply to empty industrial buildings, shops, offices, warehouses and damaged properties, as well as vacant ground for development.
From April 1st, the Scottish Government will devolve these reliefs to local authorities, but with funding to cover the cost of the support. Budget papers show that the council’s grant settlement from the Scottish Government includes £15.1million to maintain these reliefs in the year ahead, which is more than the £14.7million required to deliver them.
But despite other local authorities seeking to hold the relief for at least 12 months – including neighbouring Aberdeenshire – the city council will reduce all empty property reliefs to 50% for the first three months, before reducing the support to just 10% thereafter.
The changes, which will take effect within weeks, will bank £9million for the council in the first year alone, according to the budget papers. It will be reviewed annually.
Property sector concerns
Council leaders rejected pleas for a period of consultation with the commercial property sector, and there are fears that the changes will hinder efforts to bring fresh investment to Aberdeen. On Union Street alone, 80% of the 111 vacant units will be impacted by the changes.
Ryan Crighton, Policy Director at Aberdeen & Grampian Chamber Commerce, 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."
Budget winners and losers
To help offset increasing demand and costs – including an extra £5million for utility bills in 2023/24 – council tax is to rise by 5% and fees and charges by broadly 10%.
The budget includes a funding commitment of £19.4million for the Hydrogen Hub, a joint venture with bp to produce renewable energy.
More than £20million has been set aside for work on the city centre and beach masterplan across the next year. The first steps to regenerating the seafront will be taken with a new “urban skate park”.
And there will be a £100,000 contribution, spread evenly over the next three years, to help regenerate Union Street in response to both the council’s empty shops plan and wider work following the Union Street Summit, organised by Aberdeen Inspired and the Chamber. Details are to be announced in the months ahead.
The £160,000 at risk for Visit Aberdeenshire has been saved following concerns that it could lead to scores of tourists opting to stay in Glasgow, Edinburgh and Dundee instead. But the £20,000 in council funding for the Aberdeen Inspired night-time manager role will be pulled.
A proposed reduction of £815,000 in culture grants was earmarked by officers, but the administration reduced the scale of the cut to just £163,000 in their approved budget.
However, a £687,000 cut to Sport Aberdeen has left the organisation considering closures across Aberdeen. £94,000 of funding towards Aberdeen Sports Village will be cut too.
Education, education, education
Education will be a key element of capital spend over the next five years. This includes:
- £91.5m for a new secondary school for Hazlehead and Countesswells;
- £13.2m to extend Bucksburn Academy;
- £27.5m for first of two new primaries in the Bucksburn/Newhills area;
- £27.5m for the first of two new primaries in Grandhome.
Councillor Alex McLellan, convener of the Finance and Resources Committee, said: “The cost-of-living crisis is hitting everyone hard, with soaring food and fuel bills, and we have targeted spending to support those most in need – providing additional spend to foodbanks, the Scottish Welfare Fund and our financial inclusion team – whilst also protecting the likes of the Fairer Aberdeen Fund.
“As well as protecting vital services from cuts, our budget commits to investing over £200million in our school estate and just under £100m in transforming our beachfront and city centre – we are committed to ensuring Aberdeen is a place people want to live, work, study, raise a family, and a place where businesses want to invest.”