When one talks about Scotland's listed buildings, many will think about our historic buildings such as the Kelvingrove Art Gallery in Glasgow's West End and the iconic Eilean Donan Castle in the Highlands. However in Scotland, listed buildings are often also desirable business properties for all asset classes, including hotels, retail, offices and restaurants. Many are located in our city centres in prime retail or other locations and are regularly bought and sold in the investment market. Whilst the market is used to that, here we look a bit deeper at listed buildings and consider if there are additional legal restrictions and responsibilities that come with owning a listed building in Scotland.

Background

There are some 47,000 listed buildings in Scotland. Many retain their historic use and are tourist attractions. However many others are in commercial use, such as offices, hotels, and food and drink venues. Their unique characteristics often make them desirable properties.

We refer generically to a building being 'listed', but that does not necessarily mean the entire building has listed status with Historic Environment Scotland. Listing covers special architectural features, as well as historic interests. For many buildings, only parts of the building may be listed whether internally and/or externally. Listed buildings are also not necessarily old, and include a wide range of structures such as the skatepark in Livingston.

Statutory controls – listed building consent

With a listed building, the main restriction on an owner or occupier is the requirement to obtain listed building consent for works. That applies to demolition, alteration or extension in any manner which would affect the building's character as a building of special architectural or historic interest. Listed building consent is required in addition to any planning permission which may be required. For a developer / owner or occupier looking to carry out works, that has cost and timing implications.

Failure to obtain consent is a potential issue because failure to obtain listed building consent never becomes immune from enforcement (in contrast to breaches of planning control). In more extreme cases, acquiring the building through a share purchase of the owning entity could involve continuing criminal liability as the liability on the 'defaulting' owner would transfer to the parties who acquire control of it.

The need for consent, and the likelihood of consent being granted, is very specific to the reasons for listing the particular building or structure. There can be difficulties depending on the specific features of the building that are listed, for example with external lighting, erecting commercial signage, and installing carbon reduction measures. The interior of the building may also be protected. Even mundane internal works, such as replacing a solid door with a glass door, or installing full access ramps, might require consent.

Purchase of a listed building therefore requires enhanced due diligence. That would require ensuring that all relevant works had a corresponding listed building consent; and/or identifying any potential breaches of that consent which could carry over to the purchaser.

Maintenance

It is a myth that the law requires a listed building to be kept in good condition. Local authorities only have legal powers to ensure preservation of the building. The building needs to be in very poor condition before they will be able to act. Neighbourhoods can be blighted by listed buildings falling into disrepair while waiting for redevelopment. However whilst there is no statutory obligation to keep a listed building in good condition, there are other commercial reasons where one may need to do so, for example to ensure insurance is obtained and maintained.

With listed buildings that are occupied and being used commercially, e.g. a multi-let office building, a restaurant or the like, the listing could impact on ongoing management to the building. Where an owner, landlord or its funder is keen to improve the environmental performance of the building or introduce 'green' leases for example, it may be hampered by the listing in terms of what it can change both internally and externally and the cost of doing so. For example, old windows may not be capable of replacement with new PVC double glazing. Instead, only bespoke sash and case glazing may be allowed. That has implications in terms of timescales for works, availability of qualified contractors and manufacturers, and cost – both the initial cost of the works and the longer term impact on utility costs. Making a building the highest environmental rating possible may not be achievable with a listed building.

Asset or liability?

Whilst owning a listed building comes with additional legal restrictions and responsibilities they do not necessarily make the building a liability. Depending on the reasons for listing the building, a range of alterations may be permissible.

When considering acquiring a – potentially iconic – listed building, one should weigh up the benefit and prestige of the building, often in a prime location, against the potential limitations for redevelopment or improvement.

Contributors

Neil Collar

Partner

Elizabeth Ward

Legal Director