Out-Law News 2 min. read
23 Apr 2018, 4:49 pm
The Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill was introduced to parliament at the end of March and is now being debated in the House of Commons.
Under the new legislation councils will be able to levy additional charges on houses which have been empty for two or more years.
The legislation builds on existing laws brought into place in 2013, which allow councils to charge a 50% council tax premium on these empty properties. This followed the introduction of the New Homes Bonus in 2011, giving councils the same financial incentive for bringing an empty home back into use as for building a new one.
Councils are not allowed to use the premium to penalise owners of homes that are genuinely on the market for rent or sale and there are also exemptions for homes that are empty due to the occupant living in armed forces accommodation for job-related purposes, or to annexes being used as part of a main property.
Properties which are left empty when an occupant goes into care are exempt from the levy, as are homes that are empty due to probate. Councils can apply discounts where there are special circumstances such as hardship, fire or flooding.
The government said the number of empty properties had dropped from 300,000 in 2010 to around 200,000 today, which it attributed to the 50% premium and the New Homes Bonus.
Public sector property expert Anne Bowden of Pinsent Masons, the law firm behind Out-Law.com, said while the legislation was to be welcomed it may not have the impact the government was hoping.
"A number of inner-city London boroughs in high value areas have in the past expressed a wish to raise more council tax from foreign investors who own properties lying empty, and for these types of local authorities this will be really welcome. However London is seen as a safe haven for real estate investment and additional council tax is unlikely to deter these wealthy investors from buying residential property,” Bowden said.
"The extra cash will be welcome for local authorities, but it's not going to be a game-changer for them. Up and down the country local authorities have huge revenue budget difficulties, mainly because central government funding is getting slashed year-on-year,” Bowden said.
"I don't think there will be much impact on the property market. 200,000 empty homes is a drop in the ocean compared to what's needed in Britain over the next few years,” Bowden said.
Previous data has shown that in London alone there are over 20,000 homes vacant for at least six months with thousands empty for two years or more.
In March this year the chancellor of the exchequer, Philip Hammond, announced the government was allocating £1.67 billion in additional funding for affordable housing in London as well as £100 million for a bespoke West Midlands housing package. The announcements were part of the chancellor’s spring fiscal update.