It's been four months since an amendment to the Rating (Property in Common Occupation) and Council Tax (Empty Dwellings) Bill gave local authorities in England new powers to increase premiums on empty properties. While the amendment aims to bring more properties back into the housing pool, it also represents an opportunity for overstretched councils to raise much needed funds.
Quadruple council tax on empty homes
The amendment, which passed through the House of Lords in July, will give councils the ability to increase premiums on empty homes by up to 400% by 2020. This is on a sliding scale, with the maximum premium sitting at 100% for properties left empty for two to five years, 200% for homes empty between five and ten years and up to 400% for homes that are empty for longer than ten years.
How raising the premium will affect councils
Doubling the empty homes premium could be a significant source of revenue for councils up and down the country. For example, in Leicester, where 346 homes are currently sitting empty, the local council is set to receive an additional £229,000 each year simply by increasing the tax to 100%. In Wales, many councils have ended council tax discounts on empty properties. Fewer than ten of the country's 22 local authorities still offer discounts; Newport Council is set to end discounts on empty properties by next April, increasing its tax income by a massive £580,000.
Issues with raising empty homes tax
While there is potentially a lot of money to be made by raising the tax, it also poses a few problems. Newport Council has reported that owners of empty homes are often difficult to pin down, and sometimes take longer to pay than occupiers. There is also a concern that this new legislation could have an impact on tourism in certain areas where people have second homes for holidays.
There's no simple solution for ending the funding crisis, and local authorities should take every opportunity to raise or recoup money. One way to do this is to pursue rent arrears. If you're not sure where to start, contact Duke's Bailiffs for advice and assistance.