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Concern over costs

Investors may avoid student housing under rates plan

David Melhuish

David Melhuish: ‘fraught with unfairness’ (pic: Terry Murden)

A property leader has expressed concern over a plan to impose business rates on student accommodation which could deter investment in the sector.

Like any domestic premises, student accommodation is exempt from business rates.   

However, an amendment to Non-Domestic Rates Bill was introduced at Stage 2 of the parliamentary scrutiny process without consultation, and would bring student accommodation into the scope of business rates.  

Ahead of debate on the Bill’s Stage 3, due to take place on 4 February, the Scottish Property Federation has been working across political parties to urge Holyrood to consider the damage it believes this amendment could cause to investment into the student accommodation sector.     

David Melhuish, Scottish Property Federation director, said: “Extending business rates to what is essentially domestic property is fraught with unfairness and a fundamental departure from the principles of a tax that is aimed at non-domestic properties. Business rates are not designed for properties in which people live for any significant period of time. 

“Inflicting an additional charge on student accommodation providers, who already pay business rates on their commercial spaces, will have a significant impact on the high-quality accommodation that this sector provides.  

“Over the past decade, student accommodation providers have built tens of thousands of homes for students, meaning that the houses students otherwise would have been living in are available to families or young professionals.   

“Business rates would strike a significant blow to this sector, deterring further investment at a time when government is seeking to support all housing tenures to alleviate growing housing pressure in Scottish university cities and towns.     

“This new legislation will ultimately harm Scotland’s world-class higher education system and the students who call this accommodation their home.” 

The Association of Scotland’s Self-Caterers (ASSC) has become the 28th business lobby group concerned about plans to scrap the uniform business rates and transfer control over £2.8 billion rates to local councils.

The Scottish Government remains opposed to the amendment, lodged at Stage 2 in the legislative process by Scottish Green MSP Andy Wightman, which received the support of opposition parties.

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