English Councils obtain new powers to tax empty homes

20 Jul 2018

On 18 July the House of Lords passed a government sponsored amendment during the third reading of The Rating (Property In Common Occupation) and Council Tax (Empty Dwellings) Bill which permits local councils to charge additional premiums on empty properties.

When the bill was originally introduced in March 2018, the legislation envisaged local councils being able to double the rate of tax on properties left empty for 2 years or more. That is still the case but the recent amendment now empowers councils to triple council tax on homes left vacant for 5-10 years and to quadruple it for those left empty for more than a decade.

Local Government Secretary James Brokenshire MP stated that the bill is designed to incentivise owners to bring properties back into use and could:

“…potentially provide thousands more families who have a place to call home”.

It is understood there are currently just over 200,000 empty homes (vacant for 6 months or more) in England although previous tax incentives have worked in this area. The number of empty properties has, in fact, reduced from around 300,000 in 2010 and decreased quite significantly after 2013 when councils were able to charge a 50% premium for homes left empty for 2 or more years.

The legislation is still subject to revised guidance from central government which local councils will be required to follow when applying these premiums on empty properties. It is understood councils will be required to consider their local area so that the increases do not affect owners who are genuinely trying to rent or let their property in areas of low demand or where it will interfere with significant regeneration schemes.

The amendment to the bill has been welcomed by the Local Government Association and will no doubt be useful for those councils in London where absentee owners are accused of pushing up property prices without contributing to the local economy – the so called “lights out London” problem. Indeed the issue of empty homes has been a political football during the housing crisis but whether this bill tackles the intended target and increases the number of homes in use remains to be seen.

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