The Non-Domestic Rates (Liability for Unoccupied Property) (Scotland) Act 2026 (the 'Act') is an important development for owners of vacant commercial properties across Scotland.
While the Act does not introduce any new rates liabilities, it resolves a technical issue from the Non-Domestic Rates (Scotland) Act 2020, which created uncertainty around the legal basis for charging rates on empty properties.
The Act restores the legal basis for charging rates on empty commercial properties and validates rates charged since April 2023. At the same time, it confirms that owners of vacant commercial properties remain responsible for non-domestic rates unless a relief or exemption applies.
For landlords, investors, developers and business owners, the Act provides welcome clarity on empty property rates liabilities and highlights the importance of understanding local authority relief schemes and the ongoing costs associated with holding vacant commercial premises.
Why was the Act introduced?
Non-domestic rates, more commonly known as business rates, are generally payable on commercial properties such as offices, retail units, warehouses and industrial premises. Responsibility for rates usually falls on the occupier of a property, but different rules apply when a property becomes vacant.
In late 2025, the Scottish Government identified an unintended drafting error within the Non-Domestic Rates (Scotland) Act 2020. The effect of that error was to remove the statutory basis for charging non-domestic rates on unoccupied properties from 1 April 2023 onwards.
Although local authorities continued to issue rates bills to owners of non-domestic vacant properties after this date, the legal foundation for those charges had become uncertain.
To address the issue and avoid widespread uncertainty for both councils and ratepayers, the Scottish Government introduced an emergency Bill. The Bill was subsequently passed by the Scottish Parliament and received Royal Assent on 7 January 2026. The Act came into force the following day, 8 January 2026.
What does the Act do?
The Act restores the legal framework under which owners of unoccupied non-domestic properties are liable for these rates. Importantly, the legislation applies retrospectively from 1 April 2023, ensuring that non-domestic rates charged during the period affected by the drafting error remain legally enforceable.
In practical terms, the Act:
- Confirms that owners of vacant commercial properties remain liable for non-domestic rates
- Validates non-domestic rates charged by local authorities since 1 April 2023
- Prevents large-scale repayment claims that may otherwise have arisen
- Provides certainty for both local authorities and property owners in relation to historic and future liabilities
What does this mean for commercial property owners?
The Act may have several implications for non-domestic property owners.
1. No refunds for historic Empty Property Rates
The Act’s retrospective effect may have a significant impact on vacant property owners. By confirming the validity of those rates charged on vacant properties since April 2023, property owners have little scope to challenge those payments based on the legislative defect alone.
2. Continued liability for vacant properties
The legislation confirms that owners of empty commercial properties remain responsible for non-domestic rates unless a relief or exemption applies. Commercial property owners should therefore continue to factor empty property rates into their cost projections, particularly where vacancies are expected to continue for an extended period.
3. Greater importance of Empty Property Reliefs
Since April 2023, responsibility for Empty Property Relief has been devolved to individual local authorities. As a result, the level of relief available can vary significantly from one council area to another.
Many local authorities have reviewed and, in some cases, reduced the scope of their relief schemes. Some councils now offer shorter relief periods before full rates become payable, while others have withdrawn exemptions that were previously available for listed buildings or particular categories of vacant property.
As a result, commercial property owners should ensure they are familiar with the specific relief policies that apply in the areas where their properties are located.
4. Continued focus on asset management
The ongoing cost of empty property rates provides a strong incentive for owners to bring vacant premises back into productive use where possible.
Depending on the nature of the property and the local market conditions, this may involve:
- Letting vacant space on flexible terms
- Redeveloping underutilised assets
- Reviewing eligibility for available reliefs and exemptions
- Exploring alternative uses where market demand has shifted
As relief schemes continue to evolve and holding costs remain significant, proactive asset management is becoming increasingly important.
What should commercial property owners and landlords do now?
Commercial property owners should review their portfolios and assess their current exposure to non-domestic rates on vacant premises. Particular consideration should be given to:
- The Empty Property Relief policies applicable in each local authority area
- Whether any reliefs or exemptions are available for the property considering the local authority area in which it is situated
- Future occupation, letting, or redevelopment plans
- The financial impact of prolonged vacancies
Legal advice for commercial property owners
Get in touch with our Commercial Real Estate team if you have any questions or concerns regarding the Act. Our expert solicitors can help you understand the potential implications and advise on any issues arising from owning empty commercial properties.
