Friday, 06 March 2015

Pickles reveals empty homes council tax plans

Plans to force owners of empty homes to pay council tax will increase the housing supply across England, the government said.

Communities secretary Eric Pickles published a consultation on giving local authorities more control over council tax levels. As part of the reforms, councils could abolish council tax discounts on empty homes.

Currently, councils are required to offer a 100 per cent council tax discount for the first six months a property is empty, and a discount of between 10 and 50 per cent thereafter.

The proposals include plans to allow local authorities to be given the option to charge an empty homes premium on the council tax payable on properties that have been empty for two years or more.

There are 700,000 empty properties in England, 300,000 of which have been vacant for more than six months.

Speaking at the Liberal Democrat conference in September, communities minister Andrew Stunell called the plans ‘an extra weapon in a council’s armoury in the battle to make better use of our housing stock’.

There are no plans to change the rules on council tax relief currently available for homes left empty because a person has moved into a hospital or care home, or has died, or has moved to provide care to another.

A Lib Dem source told Inside Housing that the policy was a win for Lib Dem MPs: ‘Scrapping the second homes discount and doing more to tackle empty homes have been long-standing Lib Dem policies, and Andrew Stunell has been pushing for these reforms for some time.’

Readers' comments (12)

  • F451

    What a good idea - and a more positive way of prohibiting squatting - by having houses occupied rather than abandonned.

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  • I have no sympathy for people who leave perfectly good homes empty. We live in a system of contracts and laws which determine who possesses what, and ultimately these have to be devised with some sort of political or moral philosophy as their basis; one that has to balance the public good of ensuring that people have a home against the right of private individuals to be idiots.

    In a capitalist society the government is doing property owners a favour by compelling them to let their properties. Liberty does NOT equal stupidity. Even if you pay a management company an extortionate fee, surely you still profit!!! These people aren't capitalists, they're idiots.

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  • Alpha One

    I like the idea, but I fear that Councils will apply the extra tax rather liberally and we'll all be reading about some little old lady in a nursing home who's being taxed extra for leaving her home empty whilst she recovers from surgery. Don't day I didn't warn you, it WILL happen, it always does.

    That said, and to play devils advocate for a moment, let's consider this situation and see what people think.

    Mr Landlord owns a property, his tenant moves out. Due to it's location, the property prices are dropping, he can't sell it and pay off his mortgage from the proceeds, so he has to retain it. However, due to it's location, bad transport links and not very nice neighbourhood, he can't let it either, even if he lets it at cost (the mortgage payment).

    Mr Landlord now has a property he can't sell, and he can't rent. He's looked into havingt it managed, but the agents fees can't be added on to the rent as, in the agent's opinion, the property is not worth that rent.

    He's tried a local HA, they're not interested in the property due to it's location and certainly not for the price he's asking (essentially a 3 year lease with rent at cost).

    Should he be charged a premium for having an empty property, bearing in mind he's tried to sell it, he's tried to rent it, and he's tried to have it managed?

    I agree that the premium should be charged where people are simply just keeping properties empty because they can't get the rent they want and won't sell as it's a future investment. An incentive to get them to rent or sell it would be very effective.

    However, rather than tax people more (something I'm generally against), would it not just be better to have the LA take over the property, let it out, recover the costs of any renovations from the rent, then pay a percentage of any income, after recovering costs, to the owner as a fee, taking the rest for administration?

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  • F451

    So trus Alpha, and I can really see the headline - meanwhile the Daily Jerk will cover the story of the person levied an extra charge whilst out shopping!

    But the point is that it is not an extra charge - it is the removal of a benefit. Currently people who own several homes, maybe live abroad but keep a spare home here, simply can't be bothered with the upkeep, etc - these people get a State Benefit equal to their Council Tax. The proposal is simply that these people pay their way exactly the same as the hard working people living in the house next door.

    Where homes are left empty for reasons of ill health etc, each case needs to be looked at for its merits, but even a blanket waiving of tax for people in nursing homes poses the question - if they are never going to return to their empty home why keep it empty? - obviously that gives a simple measure of is the ansence temporary or permenant, is the absence purely to avoid tax etc.

    Finally - my heart bleeds for the landlord that bought a home he can neither rent nor sell - why should I be paying his Tax though? Just because he can't get his asking price does not mean he can not sell it, he just needs to drop his price till it sells. People who buy up houses as commodities can expect little sympathy when their investment fails - or are we going to write off the Council Tax of stock market investors every time their investments fall?

    The main point is that this isn't extra taxation, it is the cancellation of an automatic high value welfare benefit paid to multiple property owners. At a time when people on minimum wage are having their benefits cut, this benefit needs to cease.

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  • "There are no plans to change the rules on council tax relief currently available for homes left empty because a person has moved into a hospital or care home, or has died, or has moved to provide care to another."

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  • Barry Gilbertson

    Sensible Social Economics...fits with the Big Idea economy. Look at the numbers : 700,000 empty homes, of which 300,000 empty for more than six months. I would charge them double after 6 months and treble after 12 months empty. Assume £1k per house per year, that would be £150m for first six months, £300m for second six months and £900m in a full year after 12 months. The totals would not grow that high as owners would reduce price, sell or rent...and that is the object of the exercise !

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  • Alpha One - if your hypothetical scenario were true I think we would have bigger fish to fry i.e. the housing market collapsing and us being thrown into a double dip recession.

    Ultimately you take a risk when you purchase a property and if you lose your property because you invested at the wrong time then that's the market baby. The Bank of England and DWP can't protect you anymore than they already have by keeping interest rates low and making mortgage interest payments after 13 weeks of being unemployed. I simply dont think your model applies.

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  • F451

    I agree romin

    If housing is not a commodity but an essential requirement for people to live in the measures to ensure people do not lose it are justified.

    If housing is a commodity, to be traded, profited from, owned in multiples etc, then, as you say, if you were not able to afford the risk then you should not have taken it.

    The only justification for propping up failed private landlords is to prevent a sudden rush of cheap property making wider housing affordable - why in the name of all things sensible would preventing such in the current climate be a good idea (unless your pockets depended on those people getting mass tax handouts to remain!)

    As to the Council Tax - if it a property tax then exempting empty houses from it is simply adding to the housing shortage, not helping solve it. Exempting empty houses renders the Council Tax a tax against occupancy - a person tax - and nobody elected for that.

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  • Nothing new here - this was known all along - but council housing officers find it easier to subsidise new build. Too much work bringing empty homes back to use.

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  • F451

    Venk - how are council housing officers in control of subsidy for new build exactly?

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